Aerospace stock Boeing (BA) got hit hard yesterday by word of a deal between itself and China, which featured 200 aircraft getting purchased. While this order is still impressive, measured in the billions of dollars when bulk discounts are applied, it still disappointed a lot of outside observers. But new reports suggest that the order may expand later on. This bit of hope was roundly rejected by investors, though, who sent Boeing shares plunging over 3% in Friday’s trading.
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The initial order of 200 planes was disappointing. Many expected that order to be closer to 500. So for this order, not even getting half the projected amount had to come across as anticlimactic. But, further reports from no less than President Trump suggest that the order could actually go up in the future, hitting as many as 750 planes, an order size better than three times the current one.
Details about the deal are still sketchy, with the rise from 200 to 750 apparently contingent on “…if they do a good job.” Either way, though, this still represents the first major deal Boeing has seen in China in almost 10 years, reports note. Trade tensions between China and the United States led to that shutdown, and it seems that these same tensions are about to be banished with help from President Trump. Though what was most odd about the deal is that, so far, Boeing has not commented on the deal itself. Normally, large orders are met with great fanfare, disappointing or otherwise.
Ramping Up the KC-46
The United States Air Force is lighting a fire under Boeing, getting a plan together for Boeing to improve delivery on the KC-46 Pegasus tanker. The plan encompasses three key points, the first of which is to step up the schedule on the Remote Vision System 2.0 retrofit. The second calls for Boeing to repurpose aircraft built earlier in the product life cycle, and the third looks to institute a “…performance-based logistics effort” to help address readiness issues.
Troy Meink, Secretary of the Air Force, noted, “The KC-46 is a cornerstone of U.S. power projection, and we are proactively partnering with Boeing to ensure it is always ready to deliver. By establishing this multi-pronged approach, we are directly improving aircraft availability, accelerating the delivery of vital new capabilities and significantly enhancing the overall supportability of the fleet.”
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BA stock based on 15 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After an 11.36% rally in its share price over the past year, the average BA price target of $273.86 per share implies 23.3% upside potential.
