Something very, very big just hit aerospace stock Boeing (BA) today. And when I say big, I mean historic. Boeing just received the single largest order in the company’s entire history, reports note, but you would not believe it to see how shareholders responded. Boeing shares ticked up fractionally in Wednesday afternoon’s trading.
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We knew that Boeing and Qatar had a couple of connections going on, thanks to the Trump administration. But now, there is one more major connection: a huge new order. Qatar Airways ordered 160 jets from Boeing, part of a $200 billion deal, which is reportedly the biggest that Boeing has ever seen. In fact, Boeing’s backlog runs about 5,600 planes strong at last report. This means that Qatar has ordered up roughly 3% of Boeing’s entire backlog by itself.
In fact, reports noted that Boeing still aspires to reach the production cap set by the Federal Aviation Administration, putting out 38 737 Max jets per month. Qatar has basically ordered Boeing’s entire production for close to half a year. When the jets are to be delivered, meanwhile, is somewhat unclear, but is not likely to be any time soon. Though not all of the jets, necessarily, will be 737 Max jets; there was no breakdown provided across multiple sources over the model numbers purchased and in what quantity.
The IRS Weighs In
Meanwhile, a bit of a gray area has been filled in by the Internal Revenue Service (IRS), regarding the proposed merger of Spirit AeroSystems (SPR) and Boeing. The private letter ruling, reports noted, was not a condition of the merger, but was simply sought for clarification.
The IRS noted that the merger would be considered a “reorganization,” and would apply to Section 368 (a) (1) (B) principles as written in 1986. There would also be no gain or loss recognized by Spirit stockholders, unless, of course, the issue of fractional shares comes up. Then, since shareholders would receive cash in lieu of those shares, there would be tax issues involved. The private letter ruling is considered binding, though under certain conditions, which means that the ruling as laid out should remain the ruling through the merger.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 14 Buys, three Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 14.93% rally in its share price over the past year, the average BA price target of $203.35 per share implies 0.68% downside risk.
