Boeing remains lower but worries over China tariffs could be overblown

|About: The Boeing Company (BA)|By:, SA News Editor

Boeing (BA -2%) continues to trade lower even as analysts believe China's proposed tariffs on various U.S. imports would affect only a few of the company's jets.

The tariffs are restricted to smaller planes with empty takeoff weights of 15K-45K kgs, which would affect the existing version of the single-aisle Boeing 737, which is being phased out, and the smallest type of the replacement 737 Max, which has only a handful of orders from Chinese customers; together, these account for just 5% of Boeing’s 737 backlog.

“This is a bad sector for China to apply tariffs,” according to analysts at Sanford Bernstein, noting that the rival Airbus (OTCPK:EADSF, OTCPK:EADSY) A320 jet is effectively sold out through 2022.

“With a strong order book, a booming commercial aerospace market and only two global manufacturers, China will need [Boeing] aircraft for many years,” says CFRA analyst Jim Corridore. “We think the stock has well overcorrected on trade worries, and would use today’s likely weakness as an enhanced buying opportunity.”

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