The stock price of Boeing Co (BA) took a dip in the morning trading session on Tuesday. Over the last few days, the stock has fallen by over 5%. This happened despite the fact that the aircraft maker lifted its estimates for plane demand in China. Since yesterday’s close at $132.12, the stock has fallen by over 1% in the late morning trading session on Tuesday.
The Chicago based company is an American multinational corporation that designs, manufactures, and sells airplanes, rotor craft, rockets, and satellites worldwide. The company also provides leasing and product support services. Boeing is among the largest global aircraft manufacturers, is the second-largest defense contractor in the world based on 2013 revenue, and is the largest exporter in the United States by dollar value.
The company said that China could require 6,810 planes valued at $1.025 trillion over the next two decades. Previous forecasts anticipated the country ordering 6,330 aircraft at $950 billion in the same period. Boeing expects that a rising middle class will grow leisure and business travel in the country.
Led by President and CEO Dennis Muilenburg, Boeing is organized into five primary divisions: Boeing Commercial Airplanes (BCA); Boeing Defense, Space & Security (BDS); Engineering, Operations & Technology; Boeing Capital; and Boeing Shared Services Group.
“The continuing expansion of China’s middle class, coupled with new visa policies and a wide range of wide body airplanes… gives us every reason to expect a very bright future for China’s long-haul market,” Randy Tinseth, Boeing Commercial Airplanes’ vice president of marketing, said in a statement. He also said that he expects passenger traffic to grow 6.4% in China annually over the next 20 years. Boeing has stayed bullish on China even as other U.S. companies have expressed concern over the country’s slower economic growth. A senior Boeing executive said in August that the plane maker was not seeing any softness in demand in China.
The company’s strengths can be seen in multiple areas, such as its revenue growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.
Boeing is currently developing the plane alongside Nasa, and testing at the Nasa Langley Research Center in Virginia, in a 14- by 22-foot (4.2 by 6.7 meter) subsonic tunnel, and will continue testing until the end of September. In the BWB design, the wing blends seamlessly into the body of the aircraft, which makes it extremely aerodynamic and creates dramatic cuts in fuel consumption, noise and emissions.
Our analysts have given a “HOLD” rating for this stock as they believe that despite the fall, this announcement should bring laurels for the company and hence expect a spike in their stock price. They have also advised investors that due to the fall in their price, the scope of an increase has become greater since this company seems on its path to success and hence buying this stock right now might turn up to be profitable.