This is a big week for aerospace stock Boeing (BA), and the week itself has barely begun. Not only is Boeing awaiting the outcome of a new government contract, but it has also taken its case back to the government about the plea deal it struck with the previous Justice Department. These points together sent shares up fractionally in Tuesday afternoon’s trading.
Boeing already landed one big win last week with its contract to build the F-47 fighter, part of the Next Generation Air Dominance (NGAD) project. But now, Boeing is up for another potential contract, to build the F/A-XX, a carrier-based stealth fighter that represents quite a bit of America’s military planning for the next several years, and has even been referenced in plans to “confront China,” reports noted.
This contract is potentially a major win, representing billions of dollars immediately—though only “single-digit billions,” reports noted—but potentially hundreds of billions over the lifetime of the contract, which is expected to be several decades. Boeing has significant competition for this prize, though, as Lockheed Martin (LMT) and Northrup Grumman (NOC) are both in the race to land this contract.
A New Sheriff
But Boeing did not stop there. In fact, word from the Wall Street Journal noted that Boeing is moving to change its plea deal, which some already regarded as a “sweetheart deal.” The deal connects back to two different crashes of 737 MAX jets, which caused several fatalities in the process. Boeing originally agreed to plead guilty to “defrauding the Federal Aviation Administration,” reports noted. A federal judge in Texas came down on the deal, though, and basically punted to the next administration.
And given that the Trump Justice Department is already open to modifying the plea agreement still further, reports noted, it may be able to get the modifications it would like. It would not be out of line; not only would Boeing have the advantage of a different Justice Department, but it would also have the advantage of a demonstrated turnaround in terms of safety at the company. Since the point of any punishment would be to effect different behavior, Boeing showing that that would be a moot point anyway may well help it.
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 15 Buys, four Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 2.65% loss in its share price over the past year, the average BA price target of $197.83 per share implies 8.22% upside potential.
