The Boeing Company (BA): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


We are downgrading our recommendation on Boeing to Neutral from Outperform as we believe the company will trade in line with the broader market indices. This is in keeping with the risks this defense giant faces from U.S. defense budget cuts, the uncertain fate of high-cost programs, risks related to key project executions and order cancellations. Nonetheless, the company seems to have retained its title of the world's largest commercial airplane manufacturer, given its impressive track record in both innovation and fuel efficiency. Recently, Boeing reported solid third-quarter results buoyed by higher commercial aircraft deliveries. It raised its full-year core earnings forecast for the third time, thanks to booming commercial aircraft demand. The company's move to further consolidate its defense business is in sync with its efforts to reduce overhead costs in the business.


Headquartered in Chicago, The Boeing Company is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. The company's customers include domestic and foreign airlines, the U.S. Department of Defense (DoD), the Department of Homeland Security, the National Aeronautics and Space Administration (NASA), other aerospace prime contractors, and certain U.S. government and commercial communications customers.

The company operates through the following segments:

Boeing Commercial Airplanes (BCA) Segment This segment develops, produces, and markets commercial jets, along with providing related support services. The company is a leading producer of commercial aircraft and has a series (737 Next-Generation narrow-body model and the 747, 767, 777 and 787 wide-body models) of commercial jetliners designed to meet a broad spectrum of passenger and cargo requirements of domestic and non-U.S. airlines.

The three segments that comprise the Boeing Defense, Space & Security (BDS) businesses are as follows:

Boeing Military Aircraft (BMA) Segment is engaged in the research, development, production, and modification of military aircraft precision engagement and mobility products and services.

Network and Space Systems (N&SS) Segment is engaged in the research, development, production, and modification of products and services to assist customers in transforming their operations through network integration, intelligence and surveillance systems, communications, architectures, and space exploration.

Global Services and Support (GS&S) Segment is engaged in the operations, maintenance, training, upgrades, and logistics support functions for military platforms and operations.

Boeing Capital Corporation (BCC) Segment In the commercial aircraft market, BCC facilitates, arranges, structures and provides selective financing solutions for the Commercial Airplanes segment customers. In the space and defense markets, BCC arranges and structures financing solutions for BDS segment government customers. Boeing Capital Corporation's portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-lease and investments.

Other Segment The Other segment includes the activities of Engineering, Operations and Technology (EO&T) and certain inter-company items. Engineering, Operations and Technology is an advanced research and development organization focused on innovative technologies, improved processes and the creation of new products.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: BCA , BMA , BCC , BA

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