Will a Trump presidency spell trouble for Boeing stock?

Boeing Co. (NYSE: BA) recently resolved with machinists, ending a seven-week strike after workers accepted a new contract. However, the aerospace giant may face continued challenges ahead, particularly if Donald Trump is reelected as President of the United States. According to Michael Kantrowitz, chief investment strategist at Piper Sandler, the implications of a Trump presidency could lead to further declines in Boeing’s stock, which is already down approximately 40% as Americans head to the polls today.Impact of a Trump presidency on BoeingTrump has proposed appointing Elon Musk to lead a government efficiency commission aimed at cutting government costs by up to $3 trillion. This move could negatively affect companies reliant on government contracts, such as Boeing, which derives about 37% of its overall revenue from federal contracts. If Musk successfully implements spending cuts, Boeing risks losing a significant portion of this revenue, which would likely exert downward pressure on its stock price.The anticipated reduction in government spending comes at a challenging time for Boeing, which is grappling with multiple issues. Recently, the company announced a stock sale to raise up to $22 billion to bolster its balance sheet, and it has suspended dividend payments to maintain attractiveness for income investors. Despite these challenges, Wall Street currently holds a consensus “overweight” rating on Boeing, with analysts predicting an upside target of $179, suggesting a potential gain of about 20%.Ongoing challenges for Boeing stockWhile the recent resolution of the strike, which cost Boeing an estimated $5.5 billion in lost earnings, may relieve some pressure, the terms of the new agreement could lead to significantly higher costs in the coming years. The company has committed to a 38% pay raise for its workers over the next four years, which will further strain its financials.Boeing, headquartered in Arlington County, Virginia, is also implementing plans to reduce its global workforce by 10%, translating to approximately 17,000 layoffs. With over $50 billion in debt and consistent quarterly losses, these factors may deter investors from entering Boeing stock.Furthermore, other defense contractors like Lockheed Martin could also face challenges if Trump returns to the White House. Kantrowitz predicts that healthcare companies, such as Humana and UnitedHealth, may experience setbacks due to reduced federal health spending under the Trump administration.In summary, the intersection of government policy, financial health, and labor agreements presents a complex landscape for Boeing. Investors will need to closely monitor the political climate and its potential impact on the aerospace giant’s stock performance.The post Will a Trump presidency spell trouble for Boeing stock? appeared first on Invezz