Investing.com — Boeing Co (NYSE:BA) is nursing losses since the election as it failed to join in the post-election surge in markets, but Jefferies points to fears that the aircraft maker could become tangled in a potential US-China trade war during a second Trump administration as a key drag on the stock.
“BA shares -10% since election vs S&P +4% suggests renewed fears of aircraft again caught up in US-China trade relations as Trump readies tariffs,” Jefferies said in a note.
The move lower in Boeing, however, suggests these concerns may be overblown. China represents just 2% of Boeing’s backlog, or 13% including unidentified orders. That is down from 23% of the company’s deliveries from 2012 to 2018.
The supply and demand backdrop, meanwhile, remains favourable, pointing to opportunities for Boeing in China, Jefferies said.
The challenge for China, Jefferies said, is the “limited domestic production” through Commercial Aircraft Corporation of China, or COMAC, the Chinese state-owned manufacturer that seeks to rival Boeing and Airbus
Investor concerns incl Trump’s proposed 10-20% border tariffs and 60% China goods tariffs that could revive the US-China trade war, in which Boeing has been used as a chess piece.
Jefferies maintained its positive outlook on Boeing, citing limited domestic production alternatives in China and the continued need for aircraft to meet growing demand in the region.
