China’s Ministry of Commerce has imposed sanctions on Boeing (NYSE:BA) and two other defense companies on Monday for arms sales to Taiwan. These sanctions coincide with Taiwan’s presidential inauguration. This move is the latest in Beijing’s series of sanctions against defense companies for selling weapons to Taiwan. China considers Taiwan, a self-ruled island, as part of its own territory.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
Details of the Sanctions
As part of these sanctions, the Chinese Ministry of Commerce has placed Boeing’s Defense, Space & Security unit, General Atomics Aeronautical Systems, and General Dynamics (NYSE:GD) Land Systems on an “unreliable entities” list and has forbidden these companies from further investment in China. Additionally, the Ministry has imposed a travel ban on senior management for the above companies.
Impact on Sanctioned Companies
It is still not clear how these sanctions could impact Boeing. However, in 2022, China had sanctioned Ted Colbert, the President and CEO of Boeing Defense, after the company won a $355 million contract to supply Harpoon missiles to Taiwan.
In contrast, General Dynamics could be more adversely impacted by these sanctions as it operates several Gulfstream and jet aviation services in China, which rely on foreign aerospace technology. The company also manufactures Abrams tanks, which Taiwan has purchased for defense.
On the other hand, General Atomics produces the Predator and Reaper drones for the U.S. military, but it’s unclear if the company sells weapons to Taiwan.
Is BA Stock a Good Buy?
Analysts remain cautiously optimistic about BA stock, with a Moderate Buy consensus rating based on 17 Buys, seven Holds, and two Sells. Year-to-date, BA has declined by more than 25%, and the average BA price target of $222.88 implies an upside potential of 18.5% from current levels.
