It was just yesterday when we found out that China would not be taking delivery of the planes ordered from aerospace stock Boeing (BA). We also got the idea that, given Boeing’s backlog of orders—which, by some reports, went back almost two decades—the idea that Boeing may not be particularly troubled by this development also came up. One day later, we found out just how untroubled as Russia stepped in, with some conditions. This did help Boeing, if just a little, as shares were up fractionally in Wednesday afternoon’s trading.
Russia was willing to take over the Chinese orders, though it did come with a condition. Russia wanted to pay for those aircraft using state assets that were currently frozen, and have been since the start of the Russia-Ukraine war. But Russia was not asking for the cash to be unfrozen immediately, reports noted. Rather, it would wait until there was a ceasefire put in place. Then it would want that cash unfrozen so that it could buy the Boeing aircraft.
The United States, via Brian Hughes, National Security Council rep, demurred a bit, noting that the United States “…will not discuss any economic commitments until a ceasefire has bee reached.” With roughly $5 billion in Russian assets sitting in the United States, and Russian airline Aeroflot needing planes, the deal would work out pretty well. A ceasefire in Ukraine certainly would not hurt either.
The Rest of the Supply Chain Story
And while the tariffs hit all at once for the Chinese airline buy, there may be a larger concern growing in terms of tariffs, exemplified by Boeing’s supply chain. The vaunted 787 Dreamliner, for its part, demonstrates this. The wings are a Japanese product, while the doors are French. And this is just for starters; much of a Boeing craft is built somewhere else before it arrives in South Carolina for assembly, reports note.
With tariffs on nearly everything, and the exact amount of those tariffs still somewhat up in the air, the end result is that things could get a lot more expensive for Boeing. And its ability to pass the buck here is somewhat limited, especially considering that two-decade book of business still outstanding. How many of those contracts have language that allows price hikes to cover inflation, let alone tariffs? That is unclear, but a potential land mine waiting in the wings.
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 12 Buys, five Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 8.67% loss in its share price over the past year, the average BA price target of $193.06 per share implies 23.8% upside potential.
