Boeing Addresses New 737 MAX Software Issue, Sending Stock Lower

Boeing shares drop on the news that the aerospace giant is addressing a new software issue tied to the 737 MAX.
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Boeing (BA) - Get Report and its beleaguered 737 MAX haven’t been cleared for takeoff just yet after the company told ABC News that it was addressing a new software issue that it discovered during a technical review of its updated system.

Reportedly, during a flight testing audit last weekend, the 737’s two flight computers were not communicating with each other at startup.

Boeing said it was unclear how long the fix will take, but it will be completed as other return-to-service updates are conducted.

The Seattle company's shares were down 2% after the report.

Boeing could take a charge of more than $5 billion as the fallout from the grounding of its beleaguered 737 MAX plane stretches to nearly a year, analysts at Canaccord said in a note Friday.

The firm cut Boeing’s price target to $350 a share from $370. Analyst Ken Herbert expects the Seattle aerospace giant to take the charge in its fourth-quarter earnings.

The charge could reflect changes to accounting block cost assumption as well as additional customer concessions, according to Herbert, leading to his more than $5 billion estimate.

“Now is the time for new CEO [Dave] Calhoun to get as much bad news out as possible and to provide the company with some additional buffer heading into 2020,” Herbert said

In the same note, Canaccord also pared its target on Spirit AeroSystems (SPR) - Get Report, the contractor that builds the 737 MAX. Boeing ordered the Wichita, Kan., company to stop building the plane while it is grounded and orders have dried up.

Spirit’s price target was cut to $74 from $88 as Canaccord expects the ramp-up in production to be more gradual than smooth once the MAX is again ready to go.