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Boeing Company
Re: On a Roll

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By kingmaddmaxx
June 25, 2004

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What's behind the recent rise? It's up about 30% since April, and 20% YTD.

S&P has a 12-month target of $50, and are pretty cautious on the future.


I think that the string of good news for Boeing recently has been outweighing the bad, at least in the perception of the investor. Let's recount a little shall we:

The Bad:

Ongoing suspension from Military Satellite Launch Contracts due to ethical lapses, as well as having half of the previously awarded contracts re-assigned to Lockheed.

Tanker decision put on an indefinite hold, following one Senator's crusade on the Hill to be a thorn in the Defense Secretary's side.

Comanche attack helicopter program cancelled due to an ever-changing battlefield and the usual attitude of Pentagon brass: The next war will be fought exactly like the last war (AKA Afghanistan had no sophisticated air-defense systems to oppose helicopters, which mean the next opponent won't either, therefore no stealthy helicopter needed.)

Shuttle Columbia tragedy, with suspension of shuttle launches (Boeing is a major part of United Space Alliance which runs shuttle fleet.)

Ongoing scandal involving ex-CEO and ex-CFO involving hiring a military regulator while still negotiating a contract.

757 announced as shutting down, 717 and 767 on life support.

The Good:

747-400 Special Freighter program (converting 747-400 passenger models to freighters) launched with a bevy of customers and interest. Though this may be a double-edged sword in ways by eliminating orders for new 747 freighters, which is all that rolls off that line anymore.

7E7 program launch with massive 50-plane order from ANA and another 2 from ANZ. Predicted sales of 200 by the end of the year, and 500 before the first plane delivers.

737 MMA contract win to supply a military derivative of the 737 as a sub hunter bringing in 10's of billions of dollars over the next 30 or so years. More minor wins for AWACS and RivetJoint 737s as well.

777 program going strong with first 777-300ER delivered and the 777-200LR soon to be ready for testing (next year.) Still strong sales here.

Edging out ahead of Airbus in orders for the first quarter for the first time in a while.

Predicted increased deliveries next year, up to 320 I think, with deliveries only going up after that....

Future Combat System making progress, though still facing critics...

A380 facing weight problems and looking like there could be more trouble for it in the future.

Connexion by Boeing launches broadband Internet in the sky for commercial travel. Asian airlines, and Lufthansa, have embraced it and it seems likely to become a standard. Next step: Supplying broadband satellite communications capabilities to the over 40,000 commercial ships at sea.

So there you have it, the highlights. I guess in my opinion the good and the bad are balanced, but who knows for sure. Keep your eyes open and be ready for the market to realize the significant run-up the stock as seen lately. It may not be about numbers but rather investor psychology that brings an end to this streak.


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