Bearish Analysts Blast Boeing After Production Cuts

Skepticism is ramping up toward BA stock

Apr 8, 2019 at 9:46 AM
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Boeing Co (NYSE:BA) stock is down 4.4% at $379.26, after the aerospace giant slashed production of its 737 MAX 8 aircraft following a global grounding in reaction to a pair of deadly crashes. Specifically, BA said it will reduce output by almost 20% to 42 units per month from 52 units per month beginning in mid-April.

A round of negative analyst notes is only stoking the bearish flames, with BofA-Merrill Lynch downgrading BA stock to "neutral" from "buy," and lowering its price objective to $420 from $480. Meanwhile, Cowen and Company cut its Boeing price target to $460 from $475, anticipating a big financial penalty and free cash flow woes for the big cap.

Analysts have been slowly adjusting their outlooks on the embattled blue chip, yet the majority of the 17 brokerages in coverage continue to maintain a "buy" or better rating, with not a single "sell" on the books. Plus, the average 12-month price target of $430.48 is a healthy 10% premium to current trading levels.

Short sellers have started increasing their exposure to BA stock, too. Short interest jumped 11.7% in the two most recent reporting periods to 4.92 million shares. The bearish bandwagon is far from full, though, considering this accounts for a slight 0.9% of the equity's available float, and would take less than one day to cover, at Boeing's average daily pace of trading.

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