Mounting costs of the 737 MAX grounding likely will force Boeing (BA -0.9%) to take a “substantial charge” in Q4 related to the mounting costs of the 737 MAX grounding, Canaccord Genuity says in lowering its stock price target to $350 from $370 as well as earnings and sales estimates.
“We are surprised the stock has held up as well as it has considering the company is perhaps facing the most severe crisis in its 100-year history, but we continue to see the financial risk as not fully reflected in the stock,” the firm writes.
Canaccord also cuts its price target for Spirit AeroSystems (SPR +0.3%) to $74 from $88 to reflect the MAX production suspension, as visibility on Q1 and FY 2020 earnings and free cash flow is challenged.
While BA and SPR are working to minimize risk to the supply chain, the production pause clearly has increased risks and costs, the firm says.
