3M and GE Warn of Supply Chain Constraints. What That Means for Boeing Ahead of Earnings

Lindsey Wasson | Reuters

A duo of industrial earnings has shed a light on supply chain constraints companies are facing.

General Electric CEO Larry Culp told CNBC on Tuesday that the company had seen supply chain issues and would raise prices to offset cost pressures in materials such as electronics, resins and steel.

3M also said that during its quarter it saw strong demand but also supply chain disruptions from the pandemic and winter storms that had driven up the price of raw materials.

That could have a knock-on effect on other industrial companies reporting earnings this week. Boeing is set to release results Wednesday and Caterpillar on Thursday.

Boeing's results could have a positive impact on GE stock, predicts Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors.

"Boeing has actually been able to deliver planes which is an important component of future expected demand, so you can't have the demand if you don't have the supply and I think that that could be very good for GE. I think that GE could be getting beaten up for an overly pessimistic outlook," Sanchez told CNBC's "Trading Nation" on Tuesday.

GE beat earnings estimates for its March-ended quarter but missed revenue expectations. Overall sales fell more than 12% -- its aviation unit saw revenue decline 28%.

Mark Newton, founder of Newton Advisors, said Boeing looks technically strong heading into earnings Wednesday.

"This is an interesting company here for two key reasons. One is it is actually down 13% over the last six weeks so it's a much better risk-reward and it's not overbought. And the second reason is structurally it's at really an interesting level right near $241 so it's still within an uptrend from last November," Newton said during the same interview.

While Boeing has pulled back from mid-March highs, it has risen 13% in 2021 – the S&P 500, by comparison is up 11%.

"It's a must to really be selective and understand your risk-reward at this stage of the rally, so I like Boeing," said Newton.

Newton targets $310 as a possible upside target for Boeing. The shares closed Tuesday at $242.47.


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