In this piece, I will evaluate two aerospace stocks: Boeing (BA) and Lockheed Martin (LMT). A closer look suggests a neutral view for Boeing and a long-term bullish view for Lockheed Martin.
Boeing is one of the largest aerospace companies in the world, manufacturing and selling airplanes, rockets, satellites, and missiles worldwide. Boeing operates through three segments: Commercial Airplanes, Defense, Space, and Security, Global Services, and Boeing Capital. Lockheed Martin is also a global aerospace company, designing, manufacturing, and selling advanced technology systems under its four units: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space Systems.
Boeing stock is down 11% over the past three months and has plunged 38% year-to-date. However, the shares are only off 12% over the last 12 months. Meanwhile, shares of Lockheed Martin have jumped 13% over the last three months, bringing their year-to-date gain to 30%. The stock is up 34% over the last 12 months. The two companies’ opposite share-price performances are indicative of the earnings results and news headlines that have been driving their stocks.
Boeing stock remains volatile following its latest earnings report, and its shares are being driven by news about disappointing results, the current strike, and the recent equity raise. Thus, a neutral view seems appropriate as it may be possible that Boeing has not hit a bottom yet.
Unfortunately, the bad news just keeps coming. Boeing workers rejected the company’s latest offer to end the strike, continuing that drama that’s costing the company about $1 billion per month, according to S&P Global Ratings. Additionally, in a potentially dilutive move for current shareholders, the company plans to raise up to $25 billion in equity or debt in the next three years to support its stretched balance sheet.
Further, Boeing reported disappointing earnings results this week, posting adjusted core losses of $10.44 per share versus expectations of $10.36 per share in losses. However, revenue came in at $17.8 billion, beating estimates of $17.3 billion.
On the other hand, things may not be all bad for Boeing. At the 2024 Invest for Kids conference, which I attended on behalf of Hedge Fund Alpha, Matt Halbower of Pentwater Capital said Boeing stock is depressed and likely to rise as the acquisition of Spirit AeroSystems (SPR) approaches, probably in April 2025.
He expects Boeing to come back from its current problems, citing Spirit AeroSystems as the reason for many of those issues and noting the company’s order backlog into 2030. Halbower also said Boeing has to buy Spirit because of the problems, which include the recent door-plug blowout incident and similar manufacturing issues.