So apparently, according to Bank of America analysts, aerospace stock Boeing (BA) is proving to be a “favored negotiating tool” of the Trump administration. Given how many airlines depend on aircraft from this company, that likely is not much surprise. But the upgrade that Bank of America threw in was a bit more surprising, and shareholders piled in, sending shares up nearly 2.5% in Monday afternoon’s trading.
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Word from Bank of America analyst Ronald Epstein—who has a five-star rating on TipRanks—advanced the notion that Boeing is proving a valuable chip in trade wars and negotiations therein. In fact, it is likely to play a hand in future negotiations as it has already played such a hand in several Middle East negotiations. Even China proved susceptible to the need for Boeing aircraft recently. Epstein upgraded Boeing shares from Neutral to Buy, and hiked the price target to a new Wall Street high of $260 from its previous $185.
But it is not just the position as Trump’s new favorite goad that is helping Boeing. Epstein pointed out that Boeing has been working to get its production back up to par and has also been dialing back on its free cash burn rates. Both of these are likely to help the bottom line. With Boeing about to finally reach the 38 737 Max planes per month cap the Federal Aviation Administration (FAA) set, and looking to push that up to 47 by the end of the year, it is clear Boeing is on the way back.
The Turkish Connection
Further, Boeing’s military operations are doing it plenty of good as well, and new reports say the Turkish government may be looking to make a deal with Boeing as well. Turkey wants to replace its KC-135 tanker aircraft, reports noted, and right now is looking at two options: the Airbus (EADSY) A330 MRTT (Multi-Role Tanker Transport), or the Boeing KC-46A.
It is unclear how many planes Turkey is looking to buy, whether or not it would do any splitting of the deal—half Boeing, half Airbus—or where exactly the negotiations sit right now. But one thing was clear from the reports: there is a clear and present need—and a “big need” at that—to get the replacement aircraft in play. It also does not hurt that making a deal will improve Turkey’s standing with one of the two countries involved. Plus, Turkey has its eye on some new cargo aircraft as well to replace fleet in that class.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 16 Buys, three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 12.33% rally in its share price over the past year, the average BA price target of $217.32 per share implies 2.53% upside potential.
