Boeing Earnings Loom: Stock Balancing Bangladesh Order Against Potential Strikes

Boeing's stock (NYSE:BA) is reacting to a variety of reports out over the weekend, holding on to 0.67% gains in the pre-market. This comes with a crucial earnings report looming for the firm, set to report tomorrow after the closing bell. A busy period for holders of Boeing, something that feel more common after recent events.

Boeing Earnings Outlook: EPS & Revenue To Improve – Yet Work To Be Done.

-The EPS loss is expected to narrow to $1.31 on the quarter, down from -$2.90 in the same period Y/Y.
-Revenue expected to have grown 28.77% to $21.72 billion.

Whilst market consensus expects continued recovery in deliveries and revenue in the latest earnings print, labor unrest and ongoing margin pressures remain key risks, despite news of an order from Bangladesh.

Potential Labor Crisis?

It was reported that Boeing (BA) is facing a potential labor crisis at its St. Louis defense facilities as union workers reject a proposed contract, raising concerns about disruptions to military aircraft production. The International Association of Machinists and Aerospace Workers (IAM) Local 837 voted down Boeing's offer, setting the stage for a possible strike.

The rejected contract included a 20% wage increase over four years and a $5,000 ratification bonus. However, the union stated that Boeing's proposal “fell short of addressing the priorities and sacrifices” of its workforce. The current contract expires on July 27, with a “cooling-off” period delaying any strike action until August 4.

Boeing's St. Louis facilities are critical to its defense operations, producing military aircraft such as the U.S. Navy's Super Hornet and the Air Force's Red Hawk trainer. A strike could disrupt production schedules and affect Boeing's defense contracts, particularly as the division expands manufacturing for the new F-47 fighter as part of the Next Generation Air Dominance (NGAD) program.

This situation echoes the 2024 Boeing machinists' strike, where over 33,000 workers walked off the job, leading to significant financial losses for the company. That strike concluded with a new contract that included a 38% wage increase over four years.

Expanded Order From Bangladesh

In a boost to Boeing, Bangladesh has committed to purchasing 25 Boeing aircraft, a substantial increase from the initially planned 14.

This expansion underscores the urgency of their needs and a concerted effort to strengthen trade relations with the U.S. Commerce Secretary Mahbubur Rahman highlighted the necessity for new aircraft within the next two years, emphasizing the strategic importance of this acquisition.

“We need new aircraft urgently,” stated Commerce Secretary Rahman, underscoring the critical need that is driving this purchase.

Beyond aircraft, Bangladesh is also ramping up imports of key U.S. commodities including wheat, soybeans, and LNG. A new agreement guarantees the import of 700,000 tonnes of U.S. wheat annually for the next five years. This multifaceted approach aims to narrow the trade deficit and stave off a potentially crippling 35% tariff hike.

Looking to the street for clues, and the average price target of $240 continues to reflect some mild perceived upside from here for Boeing.

A strong print, and positive guide could help see a re-rating of the stock, although there remains plenty of work to be done.

Today's mixed set of news leading into earnings has seen BA make a small move higher, yet the turnaround YTD (+35.60%) will have holders heading into the print a little more confident than may have been the case in previous reports.