The recent deal aerospace stock Boeing (BA) is pursuing with China represents a major advance for Boeing, but it might mean something completely different for China. In fact, new reports suggest it might mean “the end of Chinese airline manufacturing.” But the news did not sit well with investors, who saw shares drop modestly in Monday afternoon’s trading.
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Basically, if China actually goes through with the order, it would represent the biggest order in years. Since 2019, reports note, Boeing has only landed 30 orders from China, and even then, not all of those were delivered. Basically, the Chinese market pivoted to Airbus (EADSY), as well as some of its own internal development. But the Chinese need aircraft, and Boeing is in a good position to provide.
China has been working to develop its own aircraft through the auspices of the Commercial Aircraft Corp. of China (COMAC), with somewhat mixed success. But aviation expert Michael Boyd suggested that a deal like this would render COMAC largely meaningless. “This also goes out and tells the entire world that Boeing and Airbus are back in the program and there’s no one really to argue with them,” Boyd noted.
Back to the Table in St. Louis
Meanwhile, Boeing is heading back to the negotiating table to take on the St. Louis area strike. A Bloomberg report recently noted that this was an attempt from Boeing’s Kelly Ortberg to “…rebuild the company culture,” a move that was “…being put to the test by a rise in labor activism.” With labor shortages going on in several sectors, particularly in the more mechanical sectors, union workers are taking the opportunity to assert themselves.
That and Boeing did not make many friends with its last round of contract negotiations, reports note. The Bloomberg report pointed out that workers had “…grievances over pay and pensions that were sacrificed in long-term contracts.” Further, it noted, “…the company faces lingering ill will from its past tactics.” Given that Boeing does not frequently experience strikes, Boeing does not exactly have a playbook it can turn to here to end a strike quickly.
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 18 Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 32.65% rally in its share price over the past year, the average BA price target of $258.17 per share implies 13.66% upside potential.
