Investors finally have good reason to believe this beleaguered company is ready for better days.
By most measures, shares of The Boeing Company (BA 4.56%) should be down today. It reported lower year-over-year sales as well as a bigger loss for the three-month stretch ending in June, reflecting the continued fallout from design and manufacturing problems with some of its newer passenger jets.
And yet, data from S&P Global Market Intelligence indicates that as of 2:41 p.m. ET Boeing shares are nearly 4.6% higher for the day. What gives?
In simplest terms, investors are finally seeing a light at the end of the tunnel.
Much-needed help is on the way
It was more of the same for beleaguered Boeing’s second fiscal quarter of the year. Renewed concerns about the safety of its aircraft dragged revenue down from over $19.7 billion a year ago to a little less than $16.9 billion this time around, with deliveries falling from 136 planes then to 92 now. The company’s order backlog also fell from $521 billion as of the end of last year to a little less than $516 billion now, reversing the backlog’s growth seen in Q1. Perhaps worst of all, Boeing’s core loss of $0.82 per share during Q2 of last year also widened to a per-share loss of $2.90.
Nevertheless, investors are celebrating today’s announcement that Robert Kelly Ortberg has been selected as the company’s next CEO.
Ortberg replaces Dave Calhoun, who took the helm in 2020 following a pair of 737 MAX crashes that claimed the lives of over 300 people. Although Calhoun arguably inherited all of the key problems that have undermined Boeing in recent years, he’s closely associated with a troubling period in the company’s history. Ortberg is a qualified outsider being viewed as someone capable of bringing a much-needed fresh perspective on how Boeing operates.
Boeing stock just needed the right nudge
It remains to be seen if a successful top-down overhaul is truly in the cards, of course. After all, as was the case with Calhoun, Ortberg is inheriting some deep-seeded challenges.
Perceptions are powerful, though… powerful enough to not just convince would-be shareholders that better days are ahead, but to convince airlines that Boeing’s planes will be safer soon enough. Both are bullish for this particular stock, which is still down more than 25% from December’s multiyear high (and down by more than 50% since 2019’s peak) despite the 18% gain since April’s 52-week low.
Connect the dots. There’s now room and reason for Boeing shares to trek higher. Just remain prepared for more drama-driven volatility if you decide to step in.
James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.