January has not been kind to Boeing Co (BA). In fact, the Boeing stock price has plunged nearly 15% since the beginning of the year, leaving the shares trading at their lowest point since August.
However, BA stock is now trading firmly in oversold territory, and Boeing has the opportunity to give bargain hunters a real run for their money with its fiscal first-quarter earnings report Wednesday before the market open.
Drilling into the numbers, analysts are expecting Boeing earnings of $1.62 per share on revenue of $23.55 billion for the quarter, down from earnings of $2.31 per share and revenue of $24.47 billion in the same quarter last year.
That said, data from EarningsWhisper.com indicates that some analysts have very high hopes for Boeing’s earnings, with the whisper number coming at $2.25 per share.
Overall, the brokerage community is bullish on BA stock, but not quite as bullish as the whispers are indicating. Specifically, Thomson/First Call reports that Boeing stock has garnered 15 buys, six holds, and two outright sell ratings. Furthermore, the 12-month consensus price target of $164 represents a hefty premium of 32% to where the Boeing stock price closed on Friday.
Click to Enlarge Options traders, meanwhile, are quite bearish on the short-term prospects for Boeing stock. Currently, the January/February put/call open interest ratio for BA stock comes in at 1.82, with puts nearly doubling calls among options set to expire within the next two months. This ratio dips sharply for the weekly Jan. 29 series, but still rests at an elevated 1.15.
Overall, implieds on weekly Jan. 29 series options are pricing a potential post-earnings move of about 4.3%. This places the upper bound near $129.97, while the lower bound rests near $119.25. A decline would put BA near multiyear lows, while a rally would be capped on the upside by potential resistance near $130.
2 Trades for BA Stock
Call Spread: Should Boeing manage to hit its whisper number, and not lower guidance, the shares have an excellent shot at a sharp rebound. Traders looking to capitalize on a potential post-earnings rally might want to consider a February $127/$129 bull call spread. At last check, this trade was offered at 68 cents, or $68 per pair of contracts. Breakeven lies at $127.68, while a maximum profit of $1.32, or $132 per pair of contracts, is possible if BA stock closes at or above $129 when February options expire.
Put Spread: On the other hand, hitting the whisper number would be quite a feat for Boeing, and guidance has been an issue for many blue-chip companies already this earnings season. Aside from being oversold, there is very little going for BA stock at the moment. As such, traders looking to side with the bears ahead of Boeing’s earnings might want to consider a February $120/$124 bear put spread. At last check, this spread was offered at $1.49, or $149 per pair of contracts. Breakeven lies at $122.51, while a maximum profit of $2.51, or $251 per pair of contracts, is possible if BA closes at or below $$120 when February options expire.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
