Boeing shares jumped on Wednesday after the world`s largest planemaker reported stronger-than-expected quarterly profits and cash flow, helped by soaring demand from airlines and solid defense sales and services, and raised its 2018 sales and profit estimates.
Demand from commercial airlines has driven a surge in revenue, pushing shares up by roughly a third over the past 12 months. Boeing shares were up 2.3 percent to $358.12 in morning trading, helping limit losses on Wall Street.
"There`s a lot going on in this quarterly result, but we think investors will revert to norm, and focus on Boeing`s cash flow," Vertical Research Partners analyst Robert Stallard said in a note. "This was a stronger than expected cash result, with a positive $200 million tweak to the 2018 guidance."
Boeing said the stronger cash flow was primarily driven by timing of receipts and expenditures as well as planned higher commercial airplane production rates.
Chinese airlines will buy 7,690 new planes worth $1.2 trillion over the next two decades to keep pace with booming consumer and business demand, Boeing said last month after raising a previous forecast.
Chicago-based Boeing raised its full-year profit forecast to $14.90-$15.10 from the previous $14.30-$14.50 per share, and revenue to a range of $98 billion to $100 billion, up $1 billion. It cited defense volume and services growth for the higher forecast.
Core earnings, which exclude some pension and other costs, came in 11 cents above analysts` average forecasts at $3.58 per share in the quarter ended Sept. 30.ON TRACK FOR RECORD YEAR
Boeing has delivered 568 aircraft in the first nine months of 2018, as it works to overcome factory snarls on its best-selling 737 narrowbody, up from 554 at the end of September a year ago, putting it on track to deliver another record year of plane sales.
That keeps the manufacturer, which aims to deliver between 810-815 planes in 2018, in front of its European rival Airbus SE, which delivered 503 aircraft through September this year. Airbus shares gained 2.7 percent.
Investors shrugged off a set of charges tied to recent defense contracts that Boeing said were booked on the expectation that program costs will exceed revenue.
Boeing recorded $176 million in additional charges in the quarter on its delay-plagued KC-46 aerial refueling tanker, bringing the total cost of the program to more than $3 billion.
It also took a $691-million charge on its MQ25 refueling drone and T-X training jet programs just weeks after it won the latter contract in cooperation with Sweden`s Saab AB, though the charge was offset in part by a $412 million tax benefit.
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