Boeing shares sink after fatal crash—three experts weigh in

FAN Editor

Shares of Boeing lost roughly 9 percent on Monday after one of its best-selling planes, the Boeing 737 MAX jet, saw its second deadly crash in less than five months, and Wall Street is divided on what’s next for the stock.

Here are three experts’ opinions on what’s in store for the aircraft manufacturer:

• Former Continental Airlines CEO Gordon Bethune told CNBC that what some have contended was the cause of the crash — a failed automatic sensor — needs further inspection: “Of course, there is a procedure to disconnect. So, this should never happen automatically, because if it does, you trip it. I don’t understand why that didn’t happen. I know they need to find that out, and the voice recorder and data recorder will give them that.”

• Melius Research’s Carter Copeland, an aerospace and defense analyst, said the news creates some dissonance in the shares: “You’ve got the stock now back where it was around the quarterly results, and the quarterly results were fantastic. So what you’ve seen is a multiyear story of margin improvement and cash flow generation here that played out. And I think, given where we were in the year, a lot of shareholders or potential shareholders were looking at this stock, which makes up a material portion of the [Dow Jones] index, and saying, ‘Do I have to own Boeing here or not, given its size?’ And so, now, you deal with this level of uncertainty. I think it’s kind of questionable whether folks say, ‘OK, is this a liquidity event that now you revisit, or do I want to stay on the sidelines here as we wait for more information, which we’re destined to get in the coming days and weeks?'”

• Sheila Kahyaoglu, aerospace and defense analyst at Jefferies, said the pressure’s on Boeing because of the popularity of the 737 MAX jet: “The big focus [is], obviously, it’s a tragic accident, but it’s also [that] Boeing’s commercial aircraft business is about 60 percent of sales. The 737 is about 25 percent of total company sales, and it is a big part of the free cash flow driver, so that’s why there’s such a focus. And [CEO] Dennis [Muilenburg], in December, but also in January when they put out guidance … reaffirmed their position with the 737 going up in production from 52 a month to 57 a month.”

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