Boeing re-involved in crash, analysts downgrade its rating and target price

Boeing’s shares fell more than 2 percent in intraday trading Wednesday, with several analysts more bearish on the grounds that the grounded 737 Max plane was causing trouble and another 737 crashed in Iran. A Boeing 737, carrying more than 100 people on board, crashed in Iran shortly after takeoff on January 8, local time, and was scheduled to fly to Ukraine.

The Ukrainian Embassy in Iran had previously announced that the crash was caused by engine failure, not a terrorist attack. The Ukrainian Embassy in Iran later updated the news, saying the cause of the accident was pending further investigation.

“This is a tragic incident and we extend our deepest condolences to the crew, passengers and their families,” Boeing said in a statement in response to the crash of Ukraine Airlines flight PS752. We are in contact with our airline customers and are supporting them at this difficult time. We are ready to help in any way we need. ”

Boeing re-involved in crash, analysts downgrade its rating and target price

Cowen, the investment bank, downgraded Boeing from a win-win market to match the broader market for reasons including the additional costs associated with the 737 Max’s shutdown and certification delays.

Analysts such as Cai von Rumohr, of Cowen, cut their target price to $371 from $419. He said that while the shutdown reduced the risk of further inventory backlogs, it could also disrupt supply chains and extend aircraft manufacturing times, leading to higher spending

Key parameters for the resumption of production at 737 Max indicate broad results, and uncertainty remains about the timing and financial impact of Boeing’s recovery from the crisis.

“The Boeing 737 Max is likely to make a significant correction in the fourth quarter,” the analysts wrote. ”

Separately, UBS analyst Myles Walton cut Boeing’s target price on the grounds that the 737 was grounded until mid-March, and that a drop in production would push down recent figures. Cut the target price to $360 from $370 to maintain a neutral rating.

Sheila Kahyaoglu, an analyst at jefferies, said Boeing had decided to recommend additional simulator training for 737 Max pilots.

Regarding the latest crash, the analyst said the 737 NG had few accidents and there had been nine fatal accidents since it was launched in 1997.

But Greg Konrad, an analyst at Jeffery, said his view of Boeing had “significantly changed” and noted that he had cut its forecast for the company’s cumulative free cash flow for 2019-2022 by $55 per share over the past 12 months. As the bear and bull wars continue, analysts believe Boeing’s free cash flow per share could still exceed $30, but he doesn’t expect that to happen until early 2022. Analysts added that Boeing was “well-controlled” over liquidity risk, maintaining a buy rating and a $420 target price.