- Boeing earlier this week said a software change is in the works for its 737 Max jets and Bank of America estimated it would take the aircraft manufacturer three to six months to “certify the fix.”
- Bank of America kept its buy rating and $480 price target on Boeing as the bank believes the investigation would have a “definitive timeline” which would remove a great deal of uncertainty.
- The U.S. grounded all Boeing 737 Max jets following dozens of countries. Boeing has tanked nearly 11 percent this week, on pace to post its biggest weekly decline since 2008.
The software fix that Boeing said it is working on for its 737 Max jets could take as long as six months, according to Bank of America.
The FAA on Wednesday grounded all Boeing 737 Max jets in the U.S., citing links between two fatal crashes. The turnaround came after dozens of countries grounded the planes, tanking the stock nearly 11 percent this week, on pace to post its biggest weekly decline since 2008.
Bank of America kept its buy rating and $480 price target on Boeing as the bank believes the investigation would have a “definitive timeline” as the recovery of the black boxes is already underway. This would significantly reduce the uncertainty around Boeing and the 737 Max model, the bank said. The two black boxes from the Boeing 737 Max 8 that crashed Sunday in Ethiopia were being taken to Paris for investigation.
“We would expect Boeing to continue to produce the 737 at the current rate of 52 per month in order to minimize disruption in the supply chain. Boeing may have to carry inventory in its balance sheet of about $5.5bn per quarter. We would expect working capital to improve as the aircraft begins delivery again,” Epstein said.
Bank of America Corp. shares were trading at $29.48 per share on Thursday afternoon, up $0.19 (+0.65%). Year-to-date, BAC has gained 20.25%, versus a 12.49% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of CNBC.