Boeing Shares Skyrocketing: What Does Mega-Order News From China Mean For The Manufacturer?

On Tuesday, September 23, shares of US-based aerospace manufacturer Boeing (NYSE: BA) rose around 2% following exciting news about a potential new order from China. This reported deal could be for up to 500 jets, and it would end a sales drought by Chinese airlines that has been hurting Boeing’s bottom line since 2017. Separately, the European Union extended its review of Boeing’s $4.6 billion purchase of Spirit AeroSystems back to October 14, giving Boeing much-needed time to modify its acquisition bid.

In addition to this news, Uzbekistan Airways also announced an order for 14 Boeing 787-9 models, with purchase options for around eight more, with an overall value pegged at around $8 billion by Donald Trump. Vietnamese carrier Vietjet also took delivery of its first Boeing 737 MAX 8, a piece of a massive 200-jet, $32 billion deal. Compounding rumors even suggested that Turkey is looking to acquire more Boeing jets as well. We analyze all of today’s Boeing news and what it could mean for the airline’s stock.

What Would The Reported China Deal Mean For Boeing?

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Boeing has yet to receive an order from a Chinese customer since 2017, a sales drought exacerbated by Trump’s tariff policies. China has historically been one of the largest customers for Boeing aircraft, and its lack of orders was undoubtedly a thorn in Boeing’s side. This new reported order would likely center on Boeing 737 MAX narrowbody jets and some Boeing 787 or 777X widebody aircraft, according to reports from Investor’s Business Daily.

From a strategic perspective, this order could add more units to Boeing’s backlog, helping smooth the manufacturer’s production plans for its Washington factory. This kind of order would further strengthen the manufacturer’s pricing power on order slots, as well as support higher deliveries, advance payments, and cash conversion. With demand cycles over the past couple of years squarely focused on the United States and Europe, this move could prove a much-needed reprieve.

How Directly Would This Impact Boeing Stock?

There are a few ways in which these additional orders would directly impact Boeing’s stock that investors should be aware of. For starters, the additional orders will improve Boeing’s earnings picture over the next few years, as a massive order would be sure to drive revenue growth. A massive order from China would have a ripple effect across the manufacturer’s production lines, as it would increase the company’s ability to charge higher prices for sooner-dated production slots.

Many investors are already anticipating that Boeing will receive orders from Chinese carriers as tariff tensions have begun to ease. However, few have underwritten an order of such a large size, leading investors to be pleasantly surprised by the manufacturer’s performance in the market today.

The returned support of Chinese manufacturers is a bullish signal for the company, which has lost some investor confidence in recent months. Increasing investor confidence in its growth prospects is crucial for Boeing to eventually achieve the multiple expansion it is looking for.

How Has Boeing’s Stock Performed This Year?

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Boeing shares have offered comfortable returns to investors this year, which have seen roughly 22% profits on shares held since the start of January. Considering the company’s struggles in recent years, this is undeniably a good sign for the manufacturer. The company is the third-largest in the global aerospace and defense sector with a market capitalization of around $163 billion, per Yahoo Finance statistics.

The company’s performance throughout the year has not been evenly distributed, with some downgrades taking place because of the tariff-related uncertainty of March and April. Throughout the summer, shares saw impressive growth until declining over the past few weeks.

Despite some challenges still ahead, most analysts are bullish on Boeing. The average analyst rates the stock currently as a buy, with price targets of around $250 as shares currently trade at $216.