Once again, President Donald Trump proves to be one of the best friends that aerospace stock Boeing (BA) has. One component of a recently-announced trade deal between the United States and Japan involves the Japanese planning to buy fully 100 Boeing aircraft. The news was good enough for Boeing investors, who sent shares jumping up over 2% in Wednesday afternoon’s trading.
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While the part that means anything to Boeing, and its investors, was significant—Tokyo promised the purchase of 100 Boeing aircraft—it came as part of a larger deal. Tokyo promised to buy $8 billion worth of “agricultural and other products,” as well as to “…increase defense procurement from U.S. companies by about $3 billion to $17 billion.” Japan will even nearly double its imports of rice from the United States, up 75% from previous totals.
The exact proportions of the purchase are not yet known. We do not know which models of aircraft the Japanese are planning to buy, or if the defense procurement part includes some Boeing aircraft in there as well. Boeing is more than just commercial aircraft, after all, so one or more of these parts may overlap. Still though, that is an impressive new sale to Boeing, though Boeing needs production more than it needs sales right now based on the size of its backlog.
Union Troubles Again?
It is funny, but this time last year, roughly, Boeing was having some trouble with its unions. Getting a contract set up proved to be something of a disaster, and one that ended up with an extended strike. Boeing may be trying to get out in front of any future calamity this time, with a new contract offer going out to St. Louis Boeing employees who work on fighter jets.
Boeing’s new contract to those workers features a 20% wage increase over the next four years, a $5,000 ratification bonus, and increases in sick time and vacation time as well. Union leaders are actually recommending the employees take the offered contract, which suggests that Boeing will not have the problems it had last year.
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 17 Buys, two Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 26.88% rally in its share price over the past year, the average BA price target of $244.21 per share implies 4.54% upside potential.
