Later today (July 29), before the US market opens, Boeing (NYSE: BA) will release its second quarter report. As in the last 4 quarters, the company has only been able to exceed market expectations once, in the second quarter of 2019, when the market was expecting a loss of $6.69 per share and the company reported a negative report of $5.82, Boeing investors were becoming used to disappointment even before the COVID-19 virus. It is even more worrying when you read the annual report of a loss of $636 million in total corporate revenue.
So, now that the first half of 2020 is over, looking at the orders and cancellations in the figure below, provided by AeroAnalysis, the impact of the virus becomes clearer.
Overview of Boeing order and delivery in the first half of 2020 (Source: AeroAnalysis)
Net and delivery orders have changed to minus 344 and minus 169, respectively, meaning that nothing is better than last year for 2020, while commercial aircraft orders are lower and cancellations are higher. Most airlines are not able to use more than 20% of their current capacity.
So, the question is, what should we expect?
As investors and traders, we must first examine whether this report can meet current very low expectations. Zacks estimate $0.34 per share, much better than the negative $1.70 in the previous quarter. However, it is likely that larger investors will not be looking for revenue reporting as much as they are following vaccine news and headlines. Only a reliable vaccine can bring the world back to normal, where people can fly and travel again, so the current quarterly report, even though it catches the eye, is not something investors are looking for. In addition to virus and vaccine news, US aid packages will also be important because the industry has been hit harder than expected.
Finally, it should be noted that even if the orders from the defense industry do not fall, but continue to grow, it will still not cover the company’s commercial orders.
Technical overview
As you can see in the weekly chart below, the current $170 level is below 38.2% of its Fibonacci levels, which are also below the 50- and 20-day moving averages, while the RSI is not in any of the charts. It could be above 42, and while the market volume is also growing, it confirms enough strength to continue the current downtrend. $152(23.6% Fibonacci) is the next support to which a negative report could easily push the price, while with positive news and reports, the first resistance level would be at the 50-DMA ($175 and then the next Resistance at $188)which is also 38.2% Fibo.
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Ahura Chalki
Market Analyst
Hot Forex
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