Upside Prospects For Boeing’s Stock

by Trefis Team
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Boeing’s (NYSE:BA) stock has gained momentum in recent times with support from defense spending, and international sales. This increase comes despite pressure from international trade disputes, particularly with China. Boeing currently trades at a forward P/E ratio of 19 with the stock currently trading around $340. Therefore, can Boeing’s stock rise in the coming quarters?

We currently have a price estimate of $360 per share, which is 5%  higher than the market price. You can use our interactive dashboard Can Boeing’s Stock Rise  to modify key drivers and visualize the impact on Boeing’s price estimate.

Boeing has re-iterated that despite trade disputes on the rise with China, and China being the biggest customer to its 737 series airliner, Boeing will not face any significant impact. A large part of this can be attributed to Boeing’s recent efforts to localize manufacturing. Sales to China are expected be in the  region of 7,700 units over the next decade, making China a key market. Furthermore, Boeing expects increased sales from its military division, as customers in the Asia-Pacific and the Middle East regions increase purchases. Japan and Korea are particularly expected to be key markets in the coming years, as Boeing looks to sell maritime patrol, and helicopters.

The commercial airlines space especially has been rewarding, driving margins higher during recent quarters. Efficiencies along the line of production have played an important role in improving margins, in addition to these improvements, increased spending on maintenance and spare parts are expected. All of these factors bode well for the bottom line going forward.

Should Boeing be able to continue its pace of deliveries of wide-body aircraft, and with the Federal and international governments increasing defense spending, we expect the shares to rise over time.

 

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