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Has the US-China Standoff Impacted Analysts’ Views on Boeing?

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Apr. 5 2018, Updated 3:15 p.m. ET

Analysts’ recommendations

Of the 27 analysts covering Boeing (BA) stock, eight (30%) have recommended a “strong buy.” Eight others (30%) have recommended a “buy, and 11 (40%) have recommended a “hold.”

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Analysts’ target prices

As of April 4, 2018, Boeing stock has a median target price of $394. It was $400 on March 15, 2018. Based on the closing price of $327.40 that day, that represents a return potential of 20.5%. In the last 12 months, Boeing stock has risen 85.2%. Let’s take a look at its peers’ median target prices and return potentials:

  • Lockheed Martin (LMT): $385 with a return potential of 9.4%
  • Northrop Grumman (NOC): $370 with a return potential of 2.7%
  • Raytheon (RTN): $239 with a return potential of 10.6%
  • Textron (TXT): $65 with a return potential of 12.1%
  • Hexcel (HXL): $69 with a return potential of 6.4%
  • General Dynamics (GD): $251 with a return potential of 14.1%

Investors interested in indirectly holding major industrial companies’ stocks can consider the iShares US Industrials ETF (IYJ), which has a 12.7% exposure to aerospace and defense companies.

Analysts’ take on Boeing amid trade war

JPMorgan Chase (JPM) analyst Seth Seifman said, “It appears to us that the specific proposals from China this morning are calibrated carefully to avoid a major impact on Boeing and are therefore intended more as a message to the U.S. administration.” However, analysts believe that more types of planes might be included in the dispute.

China has played cautiously in its trade and tariff conflict with the United States. It has carefully handpicked industries that would hurt US exporters the most. It’s worth noting that China is entering into the manufacturing of narrow-body aircraft in direct competition with the Boeing-Airbus duo with its C919 jetliner.

The C919 is a single-aisle narrow-body passenger aircraft built by Commercial Aircraft Corporation of China, a Chinese government arm. Perhaps the tariff imposition on planes with a huge market potential is a reminder that the Chinese regime is considering more types of planes.

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