Boeing Co (NYSE:BA, ETR:BCO) has been making steady, if not slow, progress in addressing some of the internal shortfalls that led to its current situation, Bank of America analysts believe.
In an update to clients, the analysts reduced their target price on the stock to $255 per share from $275, while noting the 737 MAX 9 issue will only put further pressure on Boeing management, as these incidents reflect less than expected progress on improving execution in the wake of the initial MAX grounding and COVID slowdown.
"We would not be surprised to see regulators, investors and customers push for a turnover in the ranks of senior management and the Board of Directors," the analysts wrote.
Analysts at Bank of America also cautioned that further production, supply chain, and labor hiccups were likely at the aircraft manufacturer.
They added that the recovery path to historical 25% cash margins on the 737 program would not only be impacted by lower production levels, but also be hit by the incremental costs of adding increased quality control following additional Federal Aviation Administration (FAA) scrutiny.
The analysts further stated that increased near-term risks and waning investor appetite could continue to weigh on the company’s stock price.
Shares of Boeing slid 8% to $200.83 in early afternoon trading on Tuesday.