- Boeing stock dropped below the lower side of the bearish flag pattern.
- The company published a weaker-than-expected financial report.
- Its commercial segment is facing major challenges.
Boeing stock made a strong bearish breakout this week, reaching its lowest level since April last year. It has slumped by over 33% from its highest point this year, with its market capitalization falling from $197 billion to $132 billion. This sell-off may continue as some of its holders start capitulating.
Boeing Stock Price Technicals Point to More Downside
The daily chart shows that the BA stock has slumped sharply in the past few months. It formed a death cross pattern in September as the 50-day moving average crossed below the 200-day moving average. This pattern often leads to more downside over time.
After forming a death cross, it formed a bearish flag pattern, which is made up of a vertical line and a horizontal channel. It has now dropped below the lower side of the flag pattern, confirming the bearish outlook.
Boeing has dropped below the Strong, Pivot, Reverse level of the Murrey Math Lines tool. It has also dropped below the Supertrend indicator. Therefore, the stock will likely continue falling, potentially to the Ultimate Support level of $150.
BA stock chart | Source: TradingView
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Boeing’s Business is Facing Challenges
BA stock plunged after the company published its quarterly earnings report on Tuesday. Its results showed that its revenue grew by just 4% in the third quarter to $24.1 billion, with the net loss narrowing to $116 million.
Its commercial revenue dropped to $10.7 billion from $11.1 billion in the same period last year. It ended the quarter with a backlog of 6,300 planes valued at $612 billion. This division continued facing challenges, especially with the certification of the 777-9 (777 Max) plane, which it now expects to receive it next year.
The company also experienced production headwinds with its 737 Max plane, with its production challenges expected to continue through next year
The weakness in its commercial division was offset by a jump in its defense, space, and security business, which generated over $7.9 billion in revenue and an operating margin of 6.2%. This division had a backlog of $101 billion. Its global services business also continued growing.
Analysts remain bullish on Boeing despite its ongoing challenges. Langenberg & Company set a target of $250, while Jefferies and Bernstein reiterated their buy rating. Analysts also expect that its revenue growth will be relatively slow this year. The estimate is that its annual revenue will rise by 8.4% to $97.1 billion.
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