Credit Suisse says sell Boeing, citing bleak sales outlook in China

A challenging sales trajectory in China given rising tensions with the U.S. creates a difficult outlook for Boeing going forward, according to Credit Suisse. Given this backdrop, analyst Scott Deuschle initiated coverage of the aircraft manufacturer with an underperform rating and a $98 price target in a note to clients Tuesday. Deuschle cited a challenging market in China as geopolitical tensions persist with the U.S., which should divert more orders toward competitors such as Airbus . China accounted for $14 billion, or 14% of total sales for Boeing in 2018, and roughly 30% of new orders between 2014 to 2017. “Our outlook for orders is negative given the previous discussion on China, macro uncertainty, USD strength, financing costs, freighter weakness, product positioning, and past overordering,” he wrote. “Orders have a strong correlation with stock performance. Given this connection, Deuschle worries that Boeing shares could suffer if a recession leads airlines to cut back on orders going forward. After plummeting more than 34% this year, Credit Suisse’s price target suggests another roughly 25% potential dropdown ahead for the stock from Tuesday’s close. The bank also initiated coverage of Northop Grumman with an outperform rating in the same note, citing a strong long-term growth story. — CNBC’s Michael Bloom contributed reporting

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