Boeing Stock: What’s the Future for the Boeing Iran Deal Under Trump?

Boeing Stock
Photo: Stephen Brashear/Getty Images

Boeing Stock to Wait for Trump’s Signal

Some good piece of news has arrived for Boeing Co (NYSE:BA) after being in the headlines last week for all the wrong reasons. But will the Trump administration play spoilsport? Boeing stock is likely to cross its 52-week high and investors will be taking cues from what Donald Trump decides next about the latest developments at Boeing Co.

Boeing Co, in its news release on Sunday, announced an agreement with Iran Air for 80 aircraft that includes 50 “737 MAX 8s,” 15 “777-300ERs,” and 15 “777-9s,” valued at $16.6 billion at list prices. Based on its Memorandum of Agreement (MOA) with Iran Air announced in June, the contract was reached within the terms of the U.S. government license issued to Boeing in September. (Source: “Boeing, Iran Air Announce Agreement for 80 Airplanes,” Boeing Co, December 11, 2016.)

Although an announcement like this would have been great for Boeing stock, there is uncertainty surrounding the reaction of the Trump administration. With this in mind, Boeing Co also emphasized that this agreement will support tens of thousands of U.S. jobs directly associated with the production and delivery of the 777-300ER aircraft, and nearly 100,000 U.S. jobs in the U.S. aerospace value stream for the full course of deliveries. The first airplanes under this agreement are scheduled for delivery in 2018.

Boeing is a major U.S. exporter, and there are fears that the trade policy of Donald Trump might backfire on the company as other countries may also impose tariffs as well as cancel deals with companies like Boeing Co. Such developments would be disastrous for BA stock.

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Moreover, Donald Trump has not been fond of the Barack Obama administration’s agreement with Iran that lifted the American sanctions on the country, so there are doubts over the future of any commercial deal with Iran. Companies like Boeing do have concerns about whether the Trump administration would support such a deal once it formally assumes office. This uncertainty may weigh on Boeing stock.

The support of the Trump administration is important, as another big issue for Boeing would be the financing of its sales to Iran. But the main concern now for Boeing and many big exporters is the future of trade with countries like Iran and China. BA stock has posted gains of almost 12% over the last year as compared to about 13% returned by the S&P 500. It is wait and watch for Boeing stock at present.