Yesterday Argus Research downgraded Boeing Co (BA) from “Buy” to “Hold”, citing a poor response from the companys management following a second fatal 737 MAX 8 crash.
Boeing shares closed higher for the third time in the past twelve trading sessions in New York on Tuesday. The stock edged up 0.31% ($1.15) to $373.43, after touching an intraday high at $378.69, or a price level not seen since March 15th ($385.71).
Shares of Boeing Company have surged 15.79% so far in 2019 compared with a 12.99% gain for the benchmark index, S&P 500 (SPX).
In 2018, Boeing’s stock went up 9.36%, thus, it again outperformed the S&P 500, which registered a 6.24% loss.
“Boeing management has not been particularly pro-active in its response, and we think the shares are subject to downward pressure as the investigation plays out in the news,” Argus analyst John Eade wrote in a client note on Tuesday, cited by CNBC. “We think the investigation is likely to cap multiples, and that earnings forecasts are likely to decline.”
On March 10th Ethiopian Airlines Flight 302 crashed shortly after the jet took off in a rural region southeast of Addis Ababa. 8 days after the incident, in a statement, Boeings Chief Executive Dennis Muilenburg said the US plane maker would maintain its “relentless commitment to make safe airplanes even safer.”
Muilenburgs statement emerged after French and Ethiopian investigators concluded that extracted data from the black boxes of the Ethiopian Airlines plane revealed “clear similarities” with the Lion Air incident last October.
“If the cause of the crashes turns out to be a mechanical or engineering issue, Boeing can correct the problem and the industry, which is heavily dependent on the plane, the 737 Max jet, can move on,” Eade noted.
“We have been long-time bulls on the BA shares, raising our rating to Buy in May 2012, when the share price was $69. Since our upgrade, the shares have appreciated almost 540%, not including dividends. However, the shares have fallen almost 17% from their highs in the wake of the second fatal crash of a Boeing airplane,” the analyst wrote.
According to CNN Money, the 21 analysts, offering 12-month forecasts regarding Boeing Company’s stock price, have a median target of $453.00, with a high estimate of $525.00 and a low estimate of $380.00. The median estimate represents a 21.31% upside compared to the closing price of $373.43 on March 19th.
The same media also reported that 18 out of 24 surveyed investment analysts had rated Boeing Company’s stock as “Buy”, while 3 – as “Hold”.
Weekly Pivot Levels
By using the traditional method of calculation, the weekly levels of importance for Boeing Co (BA) are presented as follows:
Central Pivot Point – $381.66
R1 – $400.00
R2 – $421.00
R3 – $439.34
R4 – $457.67
S1 – $360.66
S2 – $342.32
S3 – $321.32
S4 – $300.31
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