Boeing will likely get more orders, but what’s the reason for that?: BofA

Boeing is poised to benefit from renewed global trade activity under the presidency of Donald Trump, according to Bank of America, which reaffirmed its “Buy” rating and raised its price target for the stock from $260 to $270 in a note on Thursday.

The bank expects “additional orders as the Trump administration continues to work on deals globally.”

Analysts at BofA emphasized that Boeing (NYSE:BA) has established itself as a preferred instrument in U.S. trade diplomacy.

“After the initial trade deals in the UK and the Middle East, the trend accelerated,” the note said.

The firm stated that Boeing’s results for the second quarter were among “the cleanest quarters in recent years,” with higher performance in terms of earnings and free cash flow.

Although the stock fell by 4% on the day of the results, BofA attributed the decline to moderate expectations for 737 production. The bank said: “Despite the noise, we value the discipline and see further growth ahead.”

Boeing’s Commercial Airplanes (BCA) division showed steady improvement, with 737 production reaching 38 per month, and 787 production increasing to seven per month.

Efforts to reduce inventory also paid off, with 15 737s and five 787s delivered from stock.

BofA sees a path to the removal of the FAA-imposed cap on 737 production in the fourth quarter. “Although the market appears to have expected an accelerated timeline, we still believe that the most likely scenario for the removal of the cap will be in the fourth quarter.”

In the defense sector, BofA noted progress with “no negative EAC adjustments during the quarter and positive margins,” but signaled a risk of a potential strike by 2,500 Boeing Defense union workers starting August 1.