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Credit Suisse Downgrades Boeing (BA) to Neutral on Increased Risk

October 21, 2019 4:40 AM

(Updated - October 21, 2019 6:52 AM EDT)

(updated to add analyst comment)

Credit Suisse downgraded Boeing (NYSE: BA) from Outperform to Neutral with a price target of $323.00 (from $416.00).

The analyst comments "Specifically: (1) RTS: The pathway to RTS could be obstructed as the messages may shatter the fragile trust between regulators and BA. They also increase the political risk to RTS. (2) Public confidence: These messages have been broadly published in virtually every major news outlet both domestically and internationally. This may further undermine public confidence in the aircraft, which could have L-T demand implications (adding risk to 57/month recovery). That brand damage could also metastasize to other BA products. (3) Labor Productivity and Relations: If RTS is further delayed and production is cut/stopped, BA could be forced to furlough or fire a portion of its MAX workforce. This could result in lost labor force productivity when/if the MAX does return to service. We have seen the consequences of such events in shipbuilding: it can be ugly. We also note that much of the MAX workforce is unionized, and any harm could become a residual factor in future union negotiations. Most union contracts expire in ‘22. (4) Legal Risk: We cannot opine on legal issues, but point out that BA is under criminal and civil investigations."

For an analyst ratings summary and ratings history on Boeing click here. For more ratings news on Boeing click here.

Shares of Boeing closed at $344.00 yesterday.

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