Jan. 9, 2017, © Leeham Co.: Boeing’s falling a little short of a 1:1 book:bill last year was expected and drew a ho-hum from the market.
The stock was up fractionally for the rest of the day after Boeing announced the year-end data at 11 am Eastern time, closing at $159.10.
Airbus announces its full year orders and deliveries Wednesday in a press conference (Boeing only issued a press release).
Boeing’s performance was on the strength of the single-aisle 737 line. Sales of the wide-bodies were low. The 777 Classic was an anemic 17 against a goal of 40-50. Sales of the 747-8 have been falling for years, and continued to do so. Orders for the 767 rely on FedEx and the USAF.
Orders for the 787 fell well short of being 1:1, ending the year with 58 net sales and a book:bill 0.42:1.
There hasn’t been a book:bill of more than one since 2013. Boeing’s 787 backlog ended the year at 700, equivalent to a five-year backlog. In reality, deliveries stretch beyond 2022 at a decreasing rate beginning in 2021.
Kevin McAllister, who was named CEO of Boeing Commercial Airplanes shortly before Thanksgiving, sent a message to employees looking ahead this year.
“We will focus on differentiating our value with our customers, delivering on our operational and financial commitments, and focusing on meeting our plan so we can continue to invest in new products, develop the team and build a strong One Boeing culture,” he wrote in a message also sent to media. “We’re also looking forward to the first 737 MAX 8 delivery, as well as the rollout and first flight of both the 737 MAX 9 and 787-10.”
McAllister’s message didn’t address an outlook for sales this year. This will come in the form of guidance when Boeing holds its year-end earnings call Jan. 25.
Buckingham Research, which has a Neutral (Hold) rating on Boeing stock, was the first analyst note issued Friday that we received.
We reiterate our NEUTRAL rating and $100 price target, implying 37% downside, after BA reported 4Q16 deliveries and full year orders. BA reported 4Q16 deliveries of 185 large commercial aircraft, slightly below our overall expectations for 186. Relative to our expectations, however, the mix was better, with more 777s than we thought, offset slightly by more margin-dilutive 787s. Boeing also reported full year orders of 668, implying a book-to-bill of 0.89x, which we maintain is below Boeing’s expectations for about 1.0x. We think investors were anticipating a book-to-bill below 1.0x given the lack of order flow throughout the year. To many investors, a book to bill <1x is traditionally the end of the cycle.
We note that 550 of the 4Q16 orders were narrow-bodies (82% of total) versus 656 last year (75% of total). Only 75 of the orders were for widebodies (11% of total) from 155 last year (18% of total).