Divestiture, Earnings, and Tariffs: Navigating the Crosscurrents of Boeing, Verizon, and 3M

The first quarter of 2025 has been a microcosm of the broader challenges facing U.S. industrials and telecoms: geopolitical tensions, supply chain fragility, and shifting investor priorities. Boeing’s $10.6 billion divestiture, Verizon’s mixed earnings report, and 3M’s tariff-fueled resilience highlight how companies are adapting—or faltering—in a world of escalating macroeconomic headwinds.

Boeing: A Divestiture Amid Persistent Headwinds

Boeing’s sale of its Digital Aviation Solutions business to Thoma Bravo for $10.6 billion marks a strategic retreat from non-core assets to focus on its battered core operations. While the deal aims to streamline operations and free capital, the company’s stock has fallen 11% year-to-date (YTD) as investors grapple with unresolved risks.

Key challenges remain:
- China-related risks: Beijing’s suspension of Boeing aircraft deliveries, coupled with U.S. supply chain constraints, has stalled progress on its 737 MAX and Starliner programs.
- Financial strain: Boeing’s Q1 2025 results are expected to report a diluted loss of $1.28 per share, despite a 20% year-over-year revenue rise, underscoring operational inefficiencies.

Analysts remain divided. While Deutsche Bank maintains a “Buy” rating with a $215 price target, Bernstein’s cautious $169 target reflects skepticism about Boeing’s ability to resolve geopolitical and technical hurdles. Institutional investors, including BlackRock and Vanguard, have increased holdings, but insider sales in late 2024 signal mixed confidence.

Verizon: Strong Earnings, Weaker Subscribers

Verizon’s Q1 2025 earnings beat expectations, with adjusted EPS of $1.19 (vs. $1.15 estimates) and revenue of $33.5 billion (up 1.6% Y/Y). The company’s record adjusted EBITDA of $12.6 billion and free cash flow growth of $3.6 billion reflect disciplined cost management.

Yet, the stock fell 3.6% in early trading due to subscriber losses and muted guidance:
- Postpaid phone losses: Verizon lost 289,000 postpaid subscribers in Q1—double the prior-year figure—as rivals like T-Mobile and AT&T ramped up promotions.
- Guidance concerns: Management projected flat to 3% adjusted EPS growth for 2025, falling short of expectations amid fears of escalating price wars.

The market’s reaction underscores a growing investor focus on subscriber retention and long-term growth, not just quarterly metrics. Verizon’s dividend yield of 6.3% and stable free cash flow provide a floor, but its ability to stem churn will determine its trajectory.

3M: Resilience Amid Trade Tariffs

3M’s Q1 2025 results defied expectations, with adjusted EPS of $1.88 (6.4% above estimates) and revenue of $5.95 billion, despite a 25.6% year-over-year decline due to U.S.-China tariffs. The stock surged 6% on the news as investors welcomed clarity on the tariff impact:

Key takeaways:
- Tariff mitigation: 3M’s global manufacturing network reduced the blow of tariffs, which now cost $675 million annually. Management retained its full-year EPS guidance of $7.60–$7.90, with tariffs trimming 20–40 cents per share.
- Strategic adaptability: Unlike Boeing, 3M’s diversified operations and proactive cost controls have insulated its profitability, even as trade tensions intensify.

Analysts at Morgan Stanley and Goldman Sachs upgraded their ratings, citing 3M’s “resilient execution” and $900 million annual free cash flow growth.

Conclusion: Navigating Crosscurrents Requires Nuance

The divergent paths of Boeing, Verizon, and 3M illustrate how companies are faring in an era of geopolitical turbulence and sector-specific pressures:
1. Boeing faces an uphill battle to resolve supply chain and China-related risks. Its YTD stock decline and reliance on divestitures suggest investors demand tangible progress on core operations.
2. Verizon remains financially robust but vulnerable to subscriber losses and pricing wars. Its dividend and EBITDA resilience provide stability, but growth hinges on halting churn.
3. 3M has demonstrated the power of diversification and cost discipline. Its Q1 beat and tariff transparency have bolstered confidence, though trade risks remain.

Investors must weigh these dynamics against broader trends:
- Trade tensions: Boeing and 3M’s tariff exposure highlight the need for companies to hedge against U.S.-China friction.
- Technological arms races: Verizon’s 5G and fixed wireless expansion position it to capitalize on broadband demand, but execution is key.
- Valuation: Boeing trades near its 52-week average, while 3M’s 6% surge post-earnings may limit upside unless growth accelerates.

In this environment, sector rotation and company-specific fundamentals will dominate. Boeing’s stock may remain volatile until it resolves its China impasse, Verizon must prove it can stem subscriber losses, and 3M’s tariff sensitivity tests its long-term resilience. For now, 3M’s Q1 performance and Verizon’s cash flow offer the most compelling near-term stories, while Boeing remains a high-risk, high-reward bet on operational turnaround.