The good news is priced in.

Boeing ( BA) shares slid on Tuesday, despite an upgrade from Wachovia Securities and market speculation that British Airways ( BAB) will become the next airline to sign a contract to buy the company's 7E7 Dreamliner.

Wachovia analyst Robert Spingarn upgraded the company to market perform from underperform, telling investors that airlines will stop pushing off deliveries of planes, helping stabilize Boeing's long-term earnings outlook. But while the analyst is more positive on Boeing, he said shares will face some challenges in the coming months.

"We believe that the shares will trade sideways over the mid-term," said Spingarn, in his note. "We note that Boeing often trades well in front of the annual European air shows -- this year's show will occur in Farnborough, England in two weeks -- and then trades off once the headline flow quiets." (Wachovia does and seeks to do business with the companies covered in its research reports.)

In reaction, shares of Boeing, which were strong earlier in the session thanks to a bullish story in Barron's, fell 13 cents, or 0.3%, to $49.39.

In Spingarn's view, the company may well announce some good news leading up to the air shows, but said he "would expect the euphoria to subside after the show."

The euphoria could start tomorrow when Boeing is set to make an announcement regarding its 7E7 Dreamliner, the company's ambitious new fuel-efficient aircraft, set to roll into service in 2008. While the company was mum on the details of the announcement, rumors are that British Airways will become the next carrier to announce an order for 7E7s. Already All Nippon Airways has placed an order for 50 planes, valued at $6 billion.

But while Boeing's 7E7 jetliner is promising -- on March 24, Credit Suisse First Boston upgraded the company's shares because of the 7E7's potential -- Boeing will continue to lag behind rival Airbus, a unit of EADS, in the commercial aviation space. (CSFB does and seeks to do business with the companies covered in its research reports.)

On Tuesday, Airbus announced that it delivered 161 planes in the first half of 2004, putting it on track to deliver more than 305 planes for the year. Last week, Boeing said that it delivered 151 aircraft in the first half of 2004, up from 145 a year ago, and in line with current targets to deliver 285 planes in 2004.

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