close

News WrapGet Handpicked Stories from our editors directly to your mailbox

Boeing shares take another hit as more countries ground 737 MAX 8 planes

File photo. Photograph:( Reuters )

Reuters Mumbai, Maharashtra, India Mar 12, 2019, 10.21 PM (IST)

Boeing Co's stock took another beating on Tuesday, knocking off more than $25 billion from the planemaker's market value over the past two days, as more countries lined up to ground its 737 MAX 8 aircraft following Sunday's deadly crash in Ethiopia.

Britain joined China, Malaysia, Singapore, Australia and other countries in banning the 737 MAX planes, squeezing the shares, which had been one of best-performing stocks so far this year on the Dow Jones Industrial Average.

Boeing shares have delivered a total return - including reinvested dividends - of nearly four times the performance of the full index since US stocks began rebounding from the 2007-09 financial crisis.

The stock fell 7 per cent to $372 in midday trade on Tuesday, adding to a 5 per cent decline on Monday. The losses set the stock for its biggest two-day percentage drop since June 2009.

Shares of US airlines were broadly lower in midday trade, with the S&P 1500 airlines index off 1.5 per cent. Southwest Airlines Co and American Airlines Group Inc, which analysts said were among the US airlines most exposed to the Boeing aircraft model at issue, saw their shares fall more than 2 per cent.

At least seven of the 24 analysts covering the stock have reviewed their ratings over the last two days, with two downgrades and one price target cut so far, according to Refinitiv data.

DZ Bank became the first brokerage in nearly two years to place a "sell" rating on the stock, while setting a price target of $333 - the lowest on Wall Street.

Brokerage Edward Jones also downgraded the stock to "hold" from "buy", saying the accidents could result in additional expenses, some order delays and pressure financial results.

The single-aisle 737, the world's most-sold commercial aircraft, is central to Boeing's future. The MAX line is the fastest-selling jetliner in the company's history with more than 5,000 orders booked and a backlog valued at nearly $500 billion at list prices.

The United States will mandate that Boeing implement design changes by April, but said the plane was airworthy and did not need to be grounded.

Boeing defended its aircraft and said it has "full confidence in the safety of the Max."

Safety experts say it is too early to speculate on what caused Sunday's crash and black box recorders were yet to yield the cause.

Story highlights

Britain joined China, Malaysia, Singapore, Australia and other countries in banning the 737 MAX planes, squeezing the shares, which had been one of best-performing stocks so far this year on the Dow Jones Industrial Average.