Shares of Boeing (BA) - Get Report supplier Spirit AeroSystems (SPR) - Get Report plunged on Monday on a downgrade after an analyst at Canaccord Genuity downgraded the company's stock, citing near-term risk associated with its plans to maintain its current per-month delivery pace of 737 MAX shipsets.
In a research note, Canaccord Genuity analyst analyst Ken Herbert downgraded Spirit AeroSystems to hold from buy, citing the company's "surprise move" to continue producing 737 MAX shipsets at its facilities, and then store the accumulated shipsets until Boeing needs them for production.
A shipset includes fuselage, wing components and other aircraft parts.
"Spirit and Boeing have agreed to work together to minimize the disruption to Spirit operations and the supply chain," Spirit AeroSystems CEO Tom Gentile said in a statement on Monday. "This is a challenging time for our industry, and we are working with our customer Boeing to support them as they focus on returning the MAX to service.
"This staggered production approach allows us and our supply base to better prepare for and support 737 production," added Gentile.
More generally, Herbert pointed to near-term headline risk associated with the ongoing 737 MAX grounding and its impact on the broader production supply chain as reason to move to the sidelines "while we wait for better visibility on the financial impact of the lower volume and the grounding."
Herbert also lowered his 12-month price target to $92 from $100.
Boeing announced late Friday that it will temporarily adjust its 737 production to 42 from 52 MAX airplanes per month starting in mid-April.
Shares of Spirit AeroSystems fell more than 6%, or $5.77, to $83.87 on Monday on the New York Stock Exchange. The company's stock has fallen more than 13% in the past month. Boeing shares also were down significantly, falling more than 3% to $379.35.