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Boeing Co.’s nine-year streak of outperforming the S&P 500 Index in the three months leading up to the annual summer air show in Europe is about to come to an end.

So says Citigroup, which said investors had not yet priced in enough of the bad news around Boeing - the disappointing orders in 2008, further delays in the new 787 and hefty payments to airlines for late deliveries of the new Dreamliner aircraft.

Those problems, and no first flight of any 787 by Boeing’s mid-May scheduled program update, have cost Boeing credibility, Citigroup said.

Investors might be expecting another 6-month delay for the 787, according to Citi analyst George Shapiro., but “we believe further delays are likely as we are only midway through the problems. We also think the financial impact of the 787 is underestimated” with deferrals and cancellations of orders weighing on the stock.

Others said the setbacks mean the Dow component’s stock has merely become cheaper than usual.

“There is little doubt that Boeing will announce additional delays during the next few weeks,” said Bernstein Research’s Douglas Harned. But Harned rates Boeing at outperform, at least until Boeing is clearer about the Dreamliner’s progress. “As long as 787 delays remain within an 18 month window versus the original plan, we see the stock as inexpensive.”

The first delay in deliveries was announced Oct. 10, and since then Boeing’s stock, a component of the Dow industrials, has fallen 24% to $75.

Boeing Co. confirmed it would protest the award to rivals Northrop Grumman Corp. and EADS of the U.S. Air Force’s massive, multi-billion dollar air tanker refueling contract. But it doesn’t look all that good for the plane maker and aerospace company as it tries to overturn a Pentagon decision that already has come under close scrutiny.

The Government Accountability Office now has 100 days to rule on the protest for the KC-X contract. Given the visibility and the size of the order, it’s difficult to see how Boeing could succeed, said Jefferies analyst Howard Rubel. The Air Force was well aware of the high profile of the program, and “it seems to us that it would have gone out of its way to make the award ‘protest proof,’ ” he said.

The Pentagon “was particularly detailed and transparent with its review,” according to Citigroup analyst George Shapiro. “[W]e believe that Northrop will keep the contract, but we don’t think the protest will be resolved for another six-nine months,” he wrote in a note to clients.

“During this recent procurement cycle, Boeing has not lodged a contract protest that we are aware of, so this action does not come easily, as best we can tell,” added Rubel.

Boeing shares fell 2.2% to $72.74, their lowest level since September 2006. Northrop shares rose 1%.

According to analysts, Boeing said its design, based on its 767 aircraft, was rated low risk and superior in mission capability, while Northrop Grumman said its model, based on Airbus’ A330, received better marks in mission capability, past performance, cost/price, and integrated fleet assessment.

Interestingly, the ultimate price tag for the program, if the Air Force is given fleet discounts much the way airlines are, could be a lot less than the $30 billion to $40 billion figure commonly cited for 179 planes, according to Scott Hamilton of aviation consultants Leeham Co.

Wall Street is on track to break a three-session run of losses Tuesday, helped by gains in European and Asian markets, but Texas Instruments Inc. is likely to underperform after the chip maker cut its first-quarter outlook.

According to spread bettors IG Index, the Dow Jones industrial average is expected to open up 106 points at 11,846. S&P 500 futures were up 8.40 points at 1,284, while Nasdaq 100 futures rose 8 points to 1,684.75.
Wall Street sank Monday as oil’s surge above $108 a barrel and more worrisome signs for the financial sector led investors to extend last week’s losses.

The industrials fell 153.54 points, or 1.29%, to close at 11,740.15, while the Nasdaq composite index dropped 43.15, or 1.95%, to 2,169.34. The S&P 500 index lost 20, or 1.55%, to 1,273.37. The yield on the 10-year Treasury note fell to 3.46% from 3.54% late Friday, and crude oil soared to finish at a record, rising $2.75 to $107.90 a barrel on the New York Mercantile Exchange.

ECONOMIC DATA:

• International trade for January, 8:30 a.m. ET, -$59.5 billion
• IBD/TIPP Optimism index for March, 10 a.m. ET, 42.0 estimate

EARNINGS HIGHLIGHTS:

Company Symbol Period Estimate

Dick’s Sporting Goods DKS 4Q $.60
Kroger Co. KR 4Q .47
Take-Two Interactive TTWO 1Q (.51)

AFTER-HOURS ACTION:

After the close of trading Monday, Texas Instruments lowered its range of expected profits and sales in the first quarter. Boeing Co. said it plans to formally protest a $35 billion Air Force contract awarded to European Aeronautic Defence and Space Co. and Northrop Grumman Corp.