Boeing 1Q earnings: Tariffs could complicate bright prospects

Boeing will report its first-quarter earnings before the opening bell on Wednesday, looking to keep up the positive momentum from the quarter ended last December.

Earnings are expected to rise to $2.58 per share, up from $2.34 a year ago, according to estimates from Thomson Reuters. Revenue is forecast to climb to $22.35 billion, up from $20.98 billion during the same period a year earlier.

The company had a strong 2017 as one of the top performers in the Dow Jones Industrial Average, while also delivering a record number of commercial airplanes. Boeing said it delivered 763 aircraft last year – driven by its 737 single-aisle twin-jet and long-haul 787 – as well as increasing its backlog.

Yet the Chicago-based company is facing headwinds from tariffs announced earlier this month by China, which targets $50 billion of U.S. goods, including the 737. The announced tariffs were imposed as retaliation to President Donald Trump’s proposal to tax imported Chinese products, triggering fears of a trade war.

Shares of Boeing closed nearly 3% lower on Tuesday.

Still, analysts remain optimistic about the future of the company’s commercial airplane division.

“We see commercial aircraft demand remaining strong, particularly for the 787 and 737,” CFRA analyst Jim Corridore wrote in a note. “We see continued cash returns to shareholders via stock repurchases and dividends.”

He also expected pension headwinds to diminish as well as additional 787 and 777X orders driving a revival’s wide-body aircraft orders.

Corridore also expected the company’s defense business to improve despite delivery delays of the KC-46 aerial refueling tanker to the U.S. Air Force. Strong demand for the F/A-18 Super Hornet fighter jet, in particular, could propel Boeing’s defense order growth and backlog, resulting in stronger first-quarter revenue in the company’s defense business.