Boeing Co. (NYSE:BA) stock was up marginally as of early trading on March 15 but has dropped 5% week over week. The stock fell after Spirit AeroSystems Holdings, Inc. (NYSE:SPR) revealed that it was struggling to meet production targets for the 737, which is the main source of profit for Boeing. Boeing aimed to ramp up production by ten planes a month to 57 in total by 2019.
Could this be a buy-low target, or is it prudent to steer clear before Q1 earnings?
Some analysts have pointed out that the Spirit sell-off may be an overreaction, but there are other factors that could hurt its stock going forward. Boeing sends over 80% of its commercial planes to international buyers, and the Trump steel and aluminum tariffs that were recently signed in could hurt the company. China, accepted by many geopolitical analysts as the main target in Trump’s effort, is a fast-growing aircraft market. China has also promised a sharp response to tariffs.
However, Boeing should benefit from increased military spending. It is the second-largest U.S. defense contractor behind Lockheed Martin Corporation. President Trump has taken shots at the price of Boeing’s aircraft, back in December he threatened to cancel the new 747 Air Force One that he criticized for having a price tag of $4 billion. In a recent trip to its aircraft factory in St. Louis he also implied the government would go elsewhere if it did not get a “good price” for Boeing fighter jets.
