There is good news for
Investors two days after a quality problem with a supplier sent the share price down by a few dollars. Some of them come from China.
Boeing (stock symbol: BA) stock fell nearly 5% Thursday after it was revealed that some holes drilled in the rear bulkheads of some versions of the 737 MAX aircraft did not meet specifications. The parts came from the supplier
Air Spirit Systems
Shares rebounded on Friday, but remain about $5 lower than they were before the release. Shares were up 0.9% in early Monday afternoon trading at $225.35, while shares of
Standard & Poor’s 500
Dow Jones Industrial Average
Both rose about 0.5%.
“The 737’s rear depressurization problem… seems less serious than initially feared,” TD Coin analyst K. von Rumor wrote in a report released Monday. “The problem only affects about a third of the current production of MAX 8, 8-200 and 7.”
The designations 7, 8, 9 and 10 all indicate maximum sizes. Some MAX 7s and 8s have other suppliers. Von Rumor cut his estimate for 2023 MAX delivery by 25 units to 415, leaving it within the range of 400 to 450 units expected by Boeing. He added that if there were any delays, the planes would be delivered in 2024.
Von Rumohr rates Boeing stock as a Buy and aims for the $260 price. Citi analyst Jason Gorski is evaluating buying the stock as well. Its price target is $285 per share.
He also feels better about Boeing stock, not because of the news barriers, but because of China. “News reports (Friday) indicate that Boeing is set to resume deliveries to Chinese airlines,” Gorski wrote in a recent report. “This is the second of three important steps in the normalization of the company’s relationship with China.”
The first step was to reintroduce the Max to commercial service in China, which happened in December 2022. Now most of the roughly 90 Max aircraft in Chinese airlines’ fleets are back in service after two fatal accidents in five months put them out of flight in the whole world. March 2019 to December 2020.
The third step is more MAX orders. China has ordered hundreds of Max planes, but the numbers tend to underestimate demand because lessors also supply planes to airlines there.
“We continue to support our customers in China, where more than 95% of their current fleet of 737 MAX aircraft are in service,” the company said in an emailed statement. “For deliveries, we will be ready to deliver them to our customers when the time comes.”
Going into Monday’s trading, Boeing stock is up 17% so far this year and about 36% over the past 12 months. Investors are feeling better about commercial aviation because far more people are taking air travel than during the pandemic.
Write to Al Root at firstname.lastname@example.org
(tags for translation)Aerospace products/parts