Boeing shares fall for a third straight session on Monday, Embraer finalizes terms of proposed deal with US plane maker

The terms of a proposed deal between Embraer SA and Boeing Co have already been finalized, the Brazilian aerospace manufacturer announced on Monday. Under the agreement, Boeing is to acquire 80% of Embraers commercial aircraft and services operations for as much as $4.2 billion.

Boeing shares closed lower for a third consecutive trading session in New York on Monday. The stock went down 0.82% ($2.62) to $316.13, after touching an intraday low at $314.46, or a price level not seen since November 27th ($310.96).

Shares of Boeing Company have surged 7.20% so far in 2018 compared with a 4.78% drop for the benchmark index, S&P 500 (SPX).

In 2017, Boeing’s stock rose 89.43%, thus, it again outperformed the S&P 500, which registered a 19.42% return.

In April, the two companies announced that the joint venture, which is to include Embraer’s commercial jet business only and not its defense and business jet operations, would lead to the establishment of a new entity, where Boeing would own a stake of 80.01%, while the Brazilian plane maker – a stake of 19.99%.

Under the partnership, Boeing is to receive operational and management control of the new company, while Embraer is to keep consent rights for some decisions (for instance, the transfer of operations from Brazil).

Yesterday Embraers board presented the deal for approval to Brazils government, which has veto power over Embraer’s strategic decisions. According to Reuters, citing a source familiar with the negotiations, they showed optimism about the prospects.

The deal also requires approval from Boeing and Embraer shareholders as well as from regulatory authorities.

The two companies also announced another partnership aimed to promote and develop new markets for Embraers medium-size, twin-engine jet-powered military transport aircraft, KC-390. Embraer is to have a 51% stake in this new venture, while Boeing will own the remaining 49%.

According to CNN Money, the 22 analysts, offering 12-month forecasts regarding Boeing Company’s stock price, have a median target of $428.32, with a high estimate of $515.00 and a low estimate of $330.00. The median estimate represents a 35.49% upside compared to the closing price of $316.13 on December 17th.

The same media also reported that 16 out of 24 surveyed investment analysts had rated Boeing Company’s stock as “Buy”, while 5 – as “Hold”.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Boeing Co (BA) are presented as follows:

Central Pivot Point – $322.92
R1 – $330.32
R2 – $341.90
R3 – $349.30
R4 – $356.71

S1 – $311.34
S2 – $303.94
S3 – $292.36
S4 – $280.79