Boeing Shares Could Soar 50% Even Without China Trade Pact

Posted 17 Aug 2018 08:33 AM Edited 17 Aug 2018 08:35 AM

Shares of Boeing (BA) are winging higher on Thursday, helped by news that U.S.-China trade talks are back on and an analyst upgrade.

Where we were: Boeing shares had been hurt by trade tensions when the issue flared in the past, although that hasn't stopped the stock from easily outperforming the broader market this year, on the heels of 2017's stellar success. 

Where we're headed: Plenty higher, if UBS is right.

Trade tensions have certainly hurt industrial stocks, as the sector is seen as an obvious target for retaliatory tariffs, and while there may be little relief for some, shares of Boeing (BA) have been flying above the day-to-day troubles. 

Boeing is up nearly 18% since the start of the year, more than three times the S&P 500's gains, a feat even more impressive given that it was 2017's best-performing component in the Dow Jones Industrial Average.  The shares have gotten a boost from a number of factors, including a deal with Brazil's Embraer (ERJ), its robust cash flow, and generous shareholder rewards, all of which have left it more easily able to fend off worries about trade.  

Of course, investors would still be happier if the U.S. and  China played nice: Markets in general don't want a trade war. While there's plenty of reason to think that Boeing could survive one, it would just be better if China, which is ramping up air travel, wasn't on the outs with the U.S. Hence today's big leg up on renewed hopes that we'll get a deal and avoid any further escalations, in rhetoric or practice.

Boeing shares also got a boost from UBS: Analyst Myles Walton upgraded the stock to Buy from Neutral, and raised his price target to $515 from $357, arguing that the shares could gain 50%, thanks to a strong backdrop for aerospace and defense.

Walton writes that Boeing could see the best upside in the sector, as he expects it to notch $31 a share in free cash flow by 2020, 15% ahead of the consensus estimates. While the shares could get knocked around given China headlines and supplier issues, Walton writes that any selloff would be a buying opportunity, given upbeat data from his firm's Department of Defense program manager survey and ongoing demand from commercial fleets.

Now, if only management can keep from messing it up.

Boeing is up 4.5% to $346.69 this afternoon. The SPDR S&P Aerospace & Defense ETF (XAR) is 0.8% higher to $94. 



Twitter’s Stock Is Flying High After an Analyst Said It Has ‘No Direct Competitor’

Posted 14 Aug 2018 02:40 PM Edited 14 Aug 2018 03:59 PM

Twitter stock was flying high Monday after a bullish new report made the argument that the microblogging service is "more relevant now than it has ever been."
"While many view Twitter solely as the preferred form of communication for the POTUS, it has become all things media and an irreplaceable part of the global dialogue," Citron Research analyst Andrew Left wrote in a note Monday. "This past week, Elon Musk announced the potential for the largest LBO ever on Twitter, and while people were debating the quality of the financing, no one was debating the medium of the news ' Twitter. No press release or Wall St. Journal article, just Twitter."
"While TWTR is commonly bucketed with FB and SNAP, Citron believes TWTR actually sits alone, with no direct competitor in the exchange of thoughts," Left wrote.

The note, and a growing sentiment that video-related content has sparked an uptick in advertising, propelled shares of Twitter (TWTR) up more than 4%. Early in the afternoon, Twitter stock was up about 2.5% on the day, to $32.83 a share.

Left ' who compared the upside of Twitter to Toutiao, a Beijing-based news and information platform that is the second-largest private company in the world ' has a target price of $52 within a year for Twitter.

The ebullient note and strong showing of Twitter's stock today come despite nagging questions on what content Dorsey, and Twitter, allow on the platform. While Apple (AAPL), Google's YouTube, Spotify Technology (SPOT), and Facebook (FB) have banned Alex Jones and InfoWars, Dorsey has defended his right to speak within Twitter's rules. Still, Twitter is "thinking about values" to adopt.