UBS is cutting its Boeing estimates in the face of the company’s 737 Max crisis (BA)

Reuters

• UBS has cut its price target for Boeing stock from $525 down to $500.
• The Wall Street investment bank has slashed its delivery forecast for the 737 Max, one of the company’s best selling planes. 
• Follow Boeing’s stock price in real-time here.

UBS is warning clients that Boeing may deliver 50 fewer 737 Max planes this year, as the Chicago-based plane-maker confronts its biggest crisis in years.

The plane model in question, easily one of Boeing’s best-sellers and the bulk of its order book, has been grounded by most of the world’s countries while investigators piece together what caused Ethiopian Airlines flight 302 to plunge to the earth shortly after takeoff in the second such crash of a 737 Max plane.

Markets InsiderBoeing’s stock price, meanwhile, has fallen more than 7% since the latest crash as Wall Street investors worry about the impact of the fallout from the crisis on longterm business prospects for the plane.

"Questions around the 737MAX certification and controls will likely persist for some time and we may never fully understand every action that took place in either the Lion Air or Ethiopian cockpits," Myles Walton, UBS’ aerospace analyst, told clients in a note Friday.

"Our core EPS and cash flow estimates for 2020 have been trimmed by 3% and 7% respectively while we trimmed our 2019 FCF by ~16%," Walton continued. "Our 2021 estimates moved slightly and continue to not assume the 737MAX above 57/mo."

Boeing CEO Dennis Muilenburg issued another apology on Friday, saying that the company’s top engineers are "working tirelessly" on a software update as well as new training materials for the plane’s MCAS system. Muilenburg said he went on a test flight where the updated software performed flawlessly.

Read more: The US’s reputation as the gold standard for aviation safety is at a make-or-break moment as the 737 Max crashes prompt questions about Boeing’s conflicts of interest

Still, the stock’s volatility is likely to continue until Boeing can provide further information about the crash and report its impact to earnings later in April.

"We expect the next few weeks could be a bit more choppy than the last few weeks as the company will report earnings on April 24th and potentially need to make risk-mitigating production decisions (which would drive negative revisions)," Walton said.

The latest on Boeing’s 737 Max crisis:

• Boeing’s CEO offered his fullest apology yet after Ethiopia’s investigation pointed the finger at him
• The US’s reputation as the gold standard for aviation safety is at a make-or-break moment as the 737 Max crashes prompt questions about Boeing’s conflicts of interest
• The crashed Ethiopian Airlines 737 Max hit the ground at 575 mph and left a crater 32 feet deep, horrifying details in an official report reveal
• Boeing investigation reportedly finds new software problem on 737 Max planes
• Boeing and Ethiopian investigators confirm a faulty sensor was triggered on the 737 Max shortly before it crashed

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See Also:

• Boeing investigation reportedly finds new software problem on 737 Max planes
• Boeing and Ethiopian investigators confirm a faulty sensor was triggered on the 737 Max shortly before it crashed
• The CEO of the US’ largest bank is sounding the alarm on America’s crumbling infrastructure

Source: Business Insider – grapier@businessinsider.com (Graham Rapier)