Short sellers added to bets against Boeing Co (BA.N), pushing short interest up 1.4 percent to 27.4 million shares in the two weeks ended on April 15, the highest level in at least a decade, according to Thomson Reuters data released on Wednesday.The increase in short sales, in which investors sell borrowed stock in anticipation of buying it back at a lower price later, indicates concern about the shares’ prospects as Boeing faces large costs from its 787 Dreamliner and KC-46 tanker programs, analysts said.Boeing said on Wednesday that it had taken a $156 million charge in the first quarter for its KC-46 tanker program, which is at risk of falling behind schedule. [nL3N17U3VW]
But the rise in short interest came more than a week before that news. Analysts said the short sales signaled investors’ unease about potential charges and a downturn in the aircraft business cycle, both of which were apparent at the end of 2015. “People were betting on a disappointing quarter, based on the tone from the last quarter,” said analyst Jeff Windau of Edward Jones in St. Louis, who rates Boeing a “hold.”
Boeing has not taken a charge to write off deferred costs for producing 787 Dreamliners, which rose to $28.65 billion in the latest quarter. That remains a concern for investors, analysts said.But that bearishness might be short-lived, given Boeing’s performance excluding the tanker charge and during a year that includes initial production of the new 737 MAX aircraft, Windau said.
“We feel confident about the current direction of the company, but there could be weakness in orders depending on how the economy reacts and fuel prices,” he said. (Reporting by Alwyn Scott; Editing by Lisa Von Ahn)Download