The Boeing Company (BA) launched a new engine variant of its 737 series airliners christened 737 MAX. Boeing 737 is a short- to medium-range, twin-engine narrow-body passenger jet airliner. The new engine variant 737 MAX would be powered by CFM International LEAP-1B engines.
CFM International is an equally owned joint venture between GE Aviation, a division of General Electric Company (GE) and French conglomerate Safran.
The fuel efficient engines would enable the 737 MAX airliners with a distinct cost advantage over its peers in the single-aisle segment. Boeing estimates the advantage could stretch as far as 7% versus its comparable peers like the European aerospace company EADS’ Airbus A320 series airliners.
Boeing’s new 737 variant has already order commitments for 496 units from five airlines. Delivery of the airline is scheduled to begin in 2017. Boeing forecasts global demand for more than 23,000 airplanes in the 737's market segment over the next 20 years valued at nearly $2 trillion.
Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the largest aerospace and defense contractors in the world. Also its revenues are spread across more than 90 countries around the globe.
Earlier, strong performance from the commercial airplanes business and stable core operations allowed Boeing to register a solid second quarter 2011. The company surpassed both the year-ago results and the Zacks Consensus Estimates. Boeing raised its earnings per share guidance range for fiscal 2011 to $3.90 – $4.10 from an earlier band of $3.80 – $4.00, riding on the back of encouraging numbers.
However, Boeing lowered its commercial airplane delivery guidance for 2011 to a range of 485 – 495, from 485 – 500 forecasted earlier. The reduction was due to lower planned deliveries in the second half of 2011 on development programs (especially 787 and 747-8 units).
The Zacks Consensus Estimates for third quarter 2011, fiscal year 2011 and fiscal year 2012 currently stand at $1.07 per share, $4.25 per share and $5.30 per share, respectively.
Boeing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock. This is in sync with other aerospace and defense behemoths like General Dynamics Corporation (GD) and Lockheed Martin Corporation (LMT).
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment