Boeing mum on Dreamliner; analysts frustrated

Industry watchers say they can't draw a bead on the stock until Boeing gives a timetable on the new plane's launch.

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SAN FRANCISCO (Fortune) -- Boeing beat analysts' estimates, posting a 17% increase in second-quarter profits compared to 2008. Under normal circumstances that would be cause for the Street to celebrate, but the good news was overshadowed by the lack of news about the jet Boeing's future is hanging on -- the 787 Dreamliner.

Last month, Boeing (BA, Fortune 500) announced that a problem with the plane's composite construction -- undue stress discovered during testing at points where the wings join the fuselage -- would delay the radically new plane's milestone first flight. The plane is already more than two years behind schedule.

On Wednesday Boeing offered this tidbit: "The 787 program has identified a technical solution to the previously announced requirement to reinforce an area within the side-of-body joint, and is currently evaluating alternative ways to implement that solution. The company expects to complete its assessment of the schedule and financial implications during the third quarter."

So, no real update until the third quarter. That "elephant in the room" as one analyst put it, has made it very difficult to draw an investing bead on the stock, which is up 44% since March lows.

"Earnings per share beat our estimate and consensus, but with the absence of a new 787 schedule we see this as largely a non-event," J.P. Morgan aerospace analyst Joseph B. Nadol III told clients in a note after the earnings announcement.

"Big picture, we believe the stock's performance this morning is tough to call given the prospects for a longer 787 delay soon and the largely unimportant but non-bad-news-bearing earnings press release, with the backdrop of negative sentiment around the stock coming into today." Nadol has a "neutral" rating on the stock and a price target of $43.

Neutral or hold dominates the current opinion on Boeing. "We can appreciate the complexity of the task at hand, but remain concerned that as long as the visibility on the 787 remains murky, investors may shy away from the stock," wrote Alex Hamilton, director of research for Jesup & Lamont, who has a "hold" on the stock. "We believe it is prudent to stay on the sidelines for now."

The problem Boeing faces is the longer it delays delivery of the Dreamliner the longer it must wait to get paid for the planes, and the more in fines it potentially faces from the airlines waiting for their jets.

Not to mention the cash it burns up, which some analysts expect will force Boeing to raise money by the end of 2010. Boeing kept its 2009 earnings forecast unchanged, but again, that forecast hinges on the schedule of the 787 which won't be known for months.

Following Wednesday's earnings release, Boeing shares dropped almost 2% before recovering slightly on Thursday. To top of page

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