The share price of
The Boeing Company
) dropped 1.3% on Monday under the shadow of the vanished
Malaysian 777 jet and production issues resurfacing yet again
with the 787 Dreamliner. Notably, Boeing's share prices are down
more than 12% from its 52-week high of $144.57.
On Mar 7, Boeing announced that about 40 of its 787 Dreamliners
were found with possible hairline fractures in the wings on the
production line following a change in a supplier's manufacturing
process. The fallout of a manufacturing defect by Boeing's wing
manufacturer, Mitsubishi Heavy Industries Inc. of Japan, could
further delay production of the 787 Dreamliner and hit Boeing's
first-quarter 787 delivery target. Yet, its 2014 delivery
guidance of 110 jets is not expected to be impacted.
To Boeing's huge relief, the defect in the 787 planes has been
noted before delivery to clients and the hairline cracks have not
been found in the planes in use.
The much-hyped 787 Dreamliner was marred by glitches from the
very beginning. Following its delayed launch, the two battery
overheating incidents in Jan 2013 grounded the entire fleet of 50
Boeing 787 airplanes. However, in Apr 2013, Boeing received the
green light from the U.S. Federal Aviation Administration for the
787 Dreamliner's redesigned battery.
Although the aerospace behemoth has been trying to iron out
wrinkles from its troubled 787 Dreamliner plane, it seems that
for each effort, more creases are popping out in its place. Many
industry pundits attribute these repeated failures to the 787's
flawed manufacturing process.
Coming back to the most recent tragedy, Malaysia Airlines' Flight
370, a Boeing 777 aircraft, disappeared en route to Beijing on
Mar 8 with 239 people on board. With still no information after
three days of the crash, the possible causes remain elusive. The
Boeing 777 aircraft is considered one of the company's most
popular and top-selling wide-body jets with a flawless safety
record. In its 19 years of service, the plane met with only one
critical accident. Last year, the Asiana Airlines crash in San
Francisco has been blamed for pilot error.
This said, the fact remains that this aerospace and defense
leader is flying high on the back of rising demand for its new
fuel-efficient commercial planes. It reported record jet
deliveries in 2013, beating its own projection, driven by strong
commercial numbers. The heightened deliveries were also a
function of an increased production rate.
The solid performance of the company through 2013 is also
reflected in its traded price. Boeing's share price closed at
$136.49 on Dec 31, reflecting a gain of 81.2% over the
twelve-month period. Having said that, its share price is down
6.6% since the start of 2014.
Boeing presently carries a Zacks Rank #3 (Hold). There are other
companies in the sector that appear more promising and are worth
accumulating now. These are Zacks Ranked #1 (Strong Buy)
Huntington Ingalls Industries, Inc.
), and Zacks Ranked #2 (Buy)
Northrop Grumman Corp.
BOEING CO (BA): Free Stock Analysis Report
EMBRAER AIR-ADR (ERJ): Free Stock Analysis
HUNTINGTON INGL (HII): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
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