Boeing Stock (NYSE:BA) Slips Despite Huge New Israel Deal

Aerospace stock Boeing BA -1.02% ▼ recently landed a hefty win for its bottom line, signing a new contract with the Israeli government for a host of new explosive devices. Despite the nine-figure price tag involved, investors still found the deal less than palatable. They sent Boeing shares into a tailspin, down modestly in Wednesday afternoon’s trading.

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Reports noted that Boeing is now set to provide up to 5,000 air-launched smart bombs to the Israeli military, with a contract value of $289 million. This is not actually related to the current offensives in the region, as Boeing is not set to deliver the first round of munitions for a year and a half.

More specifically, Boeing will be supplying Small Diameter Bombs, guided weapons that can be launched from fighter jets with a top range of around 40 miles. This comes in addition to a previous contract between Boeing and Israel, in which the Israelis bought $8.6 billion worth of F-15 jets, reports noted. Further munitions sales are likely to follow, with the Trump administration using emergency powers to authorize the sale of over 20,000 new bombs, worth a combined total of about $650 million.

And Just in Time, Too

The news of huge new munition sales actually comes in rather handy, as Boeing will be losing revenue from another path. The United Launch Alliance, made up of Boeing and Lockheed Martin LMT +0.04% ▲ has been falling apart of late, and potential purchasers are likely reconsidering.

The ULA was hoping to launch between 20 and 30 times a year. But so far, over the last two years, it has launched just four times, missing its goal in a big way. Worse, the launches themselves have proven less than reliable, with two of the four suffering some kind of “anomaly” during launch. These anomalies are making everyone doing business with the ULA reconsider, from the United States government to Amazon AMZN -0.89% ▼ . Amazon wanted the ULA to handle launch duties connected to the Leo satellite constellation. But with all these problems on hand, will Amazon reconsider?

Is Boeing a Good Stock to Buy Right Now?

Turning to Wall Street, analysts have a Strong Buy consensus rating on BA stock based on 13 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 37.13% rally in its share price over the past year, the average BA price target of $276.36 per share implies 28.41% upside potential.

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