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Could Boeing Exceed Analysts’ Revenue Estimates in 1Q18?

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Analysts’ 1Q18 revenue estimates

In this part, we’ll discuss analysts’ estimates for Boeing’s (BA) 1Q18 revenue. Analysts now expect Boeing’s revenue to be $22.1 billion, after revising their estimate upward by $300.0 million. In fiscal 2018, they anticipate the company to report revenue of $97.1 billion, 4% higher than Boeing’s 2017 revenue of $93.3 billion.

Boeing has guided for revenue of $96.0 billion–$98.0 billion in 2018, after considering its increased production of 737 aircraft and business growth in its defense, space, and security and services segments. The company expects 1Q18 to have the lowest quarterly revenue in 2018 due to business seasonality.

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Boeing’s segment-wise revenue

In fiscal 2018, Boeing’s commercial airplanes segment is anticipated to earn revenue of $59.5 billion–$60.5 billion, its defense vertical is expected to achieve revenue of $21.5 billion–$22.5 billion, and its newly created global services division is expected to see revenue of $15.0 billion–$15.5 billion.

The IATA (International Air Transport Association) expects worldwide passenger traffic, according to revenue passenger kilometers, to grow 6%. The global aviation (IYJ) cargo business is expected to grow 4.5% to 62.5 million tons in 2018. The association is optimistic on North American aviation market conditions in 2018, and aircraft manufacturers, including Boeing, have hinted at higher pricing for narrow-body planes.

Additionally, Boeing’s defense, space, and security segment is expected to gain from Donald Trump’s policy on American products. The company remains the second-largest US defense contractor by order value. According to a White House official quoted by Reuters on April 17, 2018, “This policy seeks to mobilize the full resources of the United States government behind arms transfers that are in the U.S. national and economic security interest.”

The policy aims to allow more nations to purchase larger weapons, and more of them. These weapons include artillery, warships, and fighter jets. It also aims to relax export rules and reduce the time it takes for friendly nations to purchase weapons. Along with Boeing, the policy will likely benefit companies such as Lockheed Martin (LMT), Northrop Grumman (NOC), and Raytheon (RTN). Next, we’ll discuss analysts’ projections for Boeing’s operating margins.

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