Al Root

Boeing stock fell early Thursday after CEO Kelly Ortberg addressed employees.

His message was positive, but investors have other things on their minds now.

Boeing stock was down 1.6% in premarket trading at $160.50 a share, while S&P 500 and Dow Jones Industrial Average futures were down 1.2% and 0.9%, respectively.

The move for Boeing shares comes after Ortberg hosted a companywide webcast on Wednesday, acknowledging that Boeing's culture has become "insular," and employees across units needed to work better together.

Ortberg's job is to turn around the ailing plane maker which hasn't reported a full-year profit since 2018. He started in August, taking over for Dave Calhoun who was named CEO after Dennis Muilenburg left the company in 2019, months after the second tragic crash of a 737 MAX jet which failed because of poor software-design decisions.

Fixing culture is part of the turnaround and Ortberg said a recent employee survey had an 82% response rate, a sign employees are engaging in fixing the company.

Shares didn't get a boost from the event, though. Trade is the most likely reason why. Boeing stock has been relatively weak over the past few days as President Donald Trump's tariffs on some Mexican and Canadian imports went into effect on March 4. The president has also promised more tariffs on other nations -- including China -- in coming weeks.

Direct tariff impacts are not a big issue for Boeing. The planes it sells in the U.S. are made in the U.S. But Boeing is a big exporter, and a target for retaliation from America's trading partners.

Coming into Thursday trading, Boeing stock was down almost 7% for the week. Shares of Deere and Caterpillar -- two equipment exporters -- have wobbled as well, falling 3% and 2%, respectively.

All three generate more than 40% of annual sales outside of the U.S.

Jefferies analyst Sheila Kahyaoglu wrote this week that tariffs represented another source of uncertainty for Boeing investors. "The fear of any protectionist measures leads to the potential for retaliation risk and broad inflation," said Kahyaoglu. Still, she called risks "likely manageable." She rates Boeing stock at Buy with a $22o price target.

China is a big customer for Boeing although its exposure is difficult to quantify. Only about 2% of the 6,000-plus aircraft backlog has a Chinese customer attached, but about 12% of the backlog aren't attached to specific countries. Some of those planes could end up in China.

Boeing didn't immediately respond to a request for comment about Chinese backlog exposure.

For investors, trade retaliation is just one more thing to worry about when they would prefer to focus on production and profits.

Boeing is expected to deliver roughly 550 planes in 2025, according to FactSet, up from about 350 in 2024. Wall Street doesn't see a full-year profit yet. The per-share loss is expected to be about $1, but that's much better than the $20.38 per share loss recorded in 2024.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 06, 2025 10:19 ET (15:19 GMT)

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