For the better part of the past 2 years, industrial giant Boeing Co (NYSE:BA) has been one of Wall Street’s favorite trades. During that stretch, Boeing stock has risen about 150% from the $130’s to the $330’s.

But that favorite trade has started to unwind recently as trade war risks have escalated. Thus far in the trade war saga between the U.S. and China, neither side has really backed down. Instead, both sides have upped the ante. Most recently, China has threatened to levy 25% tariffs on 106 U.S. products.

One of those products is aircraft.

Naturally, Boeing stock has tripped up recently. It is now more than 10% off 2018 highs.

But many analysts have correctly pointed out that trade war risks are overblown, as the proposed tariffs would affect a very small number of Boeing jets. So is it time to buy the dip in BA stock?

Not quite. I’m not convinced that BA stock, even without tariff headwinds, is worth much more than $340. That is right around where the stock currently trades. As such, with sentiment pressured by broader trade war concerns, I don’t see any reason to own Boeing stock here and now.

Here’s a deeper look.

Boeing Fundamentals Are Strong, Trade War Risk Are Overblown

Boeing stock has risen by 150% over the past two years with good reason. Namely, the fundamentals in Boeing’s core airline and defense markets are dramatically improving.

First and foremost, the whole global economy is finally hitting its stride again. That helps consumer confidence and business spending, both of which provide tailwinds for Boeing’s business.

Second, there has been an explosion in the experience-first mantra among consumers globally, meaning they want to do more and travel more. This has a positive affect on airline traffic and spending.

Third, China’s massive urbanization boom means that more people than ever are starting to fly in China. This growth has longevity. More than 80% of people in the world have never taken a flight, implying that there is a tremendous growth opportunity ahead for Boeing on the airline front.

Fourth, rising international tensions (see North Korea, China, and Russia) are causing many countries to up their defense and military spends. For the first time since 2010, global sales of arms and military services grew in 2016. With tensions only rising, we are likely looking at a streak of growth years ahead.

Fifth, Boeing is a big winner thanks to tax reform. Not only will earnings go up thanks to a lower tax rate, but now that all other companies have a lower tax rate, too, those that need big aircraft and defense systems will likely start buying them in bulk.

These strong fundamentals remain strong, even in the face elevated trade war risks. Boeing does stand to lose some business in China, which is a big growth market. But outside of that, the growth narrative at Boeing remains strong.

Valuation on Boeing Stock Looks Full

That doesn’t mean it is time to buy BA stock.

Despite all those tailwinds, Boeing won’t see revenue growth get a big boost over the next several years. The company already has a revenue base of $93.4 billion. It is tough to grow from that base considering the company is already tapping most of its addressable market. Thus, revenue growth should look something like 3-5% over the next 5 years.

Margins should keep trending higher thanks to increased scale, and management is targeting 15% operating margins in the long term.

A 4% revenue growth rate over the next 5 years on 15% operating margins puts revenues at $113.6 billion and operating profits at $17 billion in 5 years. Taking out $300 million in net interest expense, 16% for taxes, and dividing by a reduced share count of presumably 500 million, you get to roughly $28.10 in earnings per share in 5 years.

BA stock normally trades at 18-times forward earnings. An 18-times forward multiple on $28.10 in earnings per share implies a 4-year forward price target of $505. Discounting that back by 10% per year, you arrive at a fair value of between $340 and $350.

Bottom Line on BA Stock

Is Beoing stock undervalued after this recent sell-off? Yes, if you think the company will be unaffected by tariffs.

But China is a big growth market for Boeing, and this whole trade thing is a wild card that isn’t worth speculating on. As such, at $330, Boeing stock doesn’t look terribly interesting.

But the farther the stock falls from $340, the more attractive it looks. The next technical line of support for BA stock is $316. That would represent a near 10% discount to fair value, so if the stock falls down to those levels, I’m a buyer.

As of this writing, Luke Lango did not hold a position in any of the aforementioned securities.