In the lead-up to earnings, Boeing (NYSE:BA) has been cruising at a level altitude. Boeing stock has stayed rangebound, barely straying from between $175 and $200 per share. Still, it’s very possible that the current performance of shares in this aerospace giant is merely the calm before storm.

Turbulence may soon return for this stock. Yes, BA has already fallen by more than 30% since the start of the year, but don’t assume this fully considers its current issues. Boeing’s earnings release may raise concerns about safety, suppliers, and aircraft production profitability. BA’s valuation heavily relies on rapid turnaround, making it susceptible to negative news.

Boeing Stock Earnings Preview

Although it’s not yet official, investors anticipate Boeing’s next quarterly earnings release to occur on or around July 31. BA shares may be holding steady, but don’t assume that this means there has been little change to sell-side pre-earnings forecasts.

In fact, one analyst, Jeffries’ Sheila Kahyaoglu, just recently widened her loss forecast for the company. Per Kahyaoglu, existing challenges with Boeing’s commercial aircraft unit, plus recently disclosed delays with the aerospace firm’s U.S. Air Force One aircraft contract, may cause Q2 2024 losses of $2.70 per share.

That’s substantially above current analyst consensus.

It’s not just worse-than-feared results that could sink Boeing stock after earnings day. Investors could view other aspects of the release as excuses to sell. Yes, there have been a few positive developments lately.

For instance, positive news related to Boeing making progress satisfying regulators from the U.S. Federal Aviation Administration. Also, the company recently announced that it had resumed deliveries of its 737 Max jet to China.

However, these and other positives could be countered by disappointing updates to guidance, as well as management updates regarding aircraft delays and recent union troubles.

Putting the Cart Before the Horse

If Boeing stock was priced at a heavily-discounted valuation, one could make the argument that shares were a contrarian buy, with high upside potential from fading “peak pessimism.”

The problem, though, is that despite all the troubles, investors continue to price BA shares as if they are just a few quarters away from disappearing. That is, sell-side forecasts call for Boeing to re-hit profitability by 2025.

Current consensus calls for earnings that year of $4.83 per share. That means, BA, at today’s prices, trades for around 37.3 times earnings one year out.

This high forward multiple represents a moderate premium to GE Aerospace’s (NYSE:GE) valuation of 31.5 times estimated 2025 earnings. Compared to the valuation of Boeing’s key commercial aircraft competitor, Airbus (OTCMKTS:EADSY), the valuation gap is even wider. Airbus trades for a mere 17.9 times estimated 2025 earnings.

Yes, with the Boeing valuation, there is also some pricing-in of anticipated additional earnings gains in 2026 and beyond, yet this continuing putting of the cart before the horse in valuing BA is still an issue. As mentioned above, falling short could have a serious negative impact on the stock price.

Bottom Line: Sell Before a Possible Rough Landing

In my view, it makes little sense that Boeing shares have experienced minimal losses lately. However, consider it a silver lining, if you currently hold a Boeing position. As price stability may only last until the upcoming earnings release, you may want to take the opportunity to make an emergency landing.

Although it’s always possible that better-than-feared results are just around the corner, based on the aforementioned issues, one may want to err on the side of caution, and assume that a rough landing is imminent.

If upcoming results and other developments fully shatter the current bull case for BA, the impact could be tremendous. A rerating to a valuation on par with GE would mean around a 15% price decline, but a rerating to an Airbus-level valuation would mean a nearly 52% drop.

That’s not to say that Boeing stock is going to halve anytime soon, but this does underscore how a 20%, 25%, or 30% further price decline may not be so out of the question.

On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.