Boeing shares booked their worst two-day stretch in over a decade after a series of Wall Street firms turned negative on the stock following reports that internal messages showed the planemaker may have misled the Federal Aviation Administration about the 737 Max safety system.
Credit Suisse and UBS downgraded Boeing on Monday, citing a company test pilot’s revelations on Friday in which he warned about difficulty operating the 737 Max’s MCAS anti-stall system.
Boeing shares fell 6.8 percent on Friday, and with Monday’s 3.8 percent loss they posted their biggest two-day decline since June 2009, according to Dow Jones Market Data. Shares closed at an all-time high of $440.62 on March 1, 2019.
“We can no longer defend the shares in light of the latest discoveries, discoveries which significantly increase the risk profile for investors,” New York-based Credit Suisse analyst Robert Spingarn wrote in a note sent to clients on Monday.
Spingarn says the 737 Max’s return to service could be obstructed by the latest revelation, which may undermine public confidence and lead to the company furloughing or firing workers and present a potential legal risk.
He downgraded Boeing shares to neutral and lowered his price target to $323 a share from $416.
Along with Spingarn, UBS analyst Myles Walton also changed his view.
“Our working thesis has been that the failures of the 737 MAX development by the company centered on fault intolerant design compounded by poor assumptions of pilot response,” Walton wrote while downgrading Boeing to underperform while slashing his price target to $375 a share from $470.
“We now have to append that assessment further based on source material provided to Congress and the FAA on Friday that reinforces the perception of and heightens the potential of incompetent disclosure, which inherently puts more money/trust & time at stake.”
Boeing is set to report its third-quarter results on Wednesday, October 23. Analysts are expecting earnings of $2.29 a share on revenue of $20.4 billion.