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NEW YORK ( TheStreet) -- Boeing ( BA - Get Report) said the electrical fire on a 787 test flight earlier this month was likely caused by "foreign debris" in a power distribution panel, and that it plans to make "minor" design changes to address the problem. "We have successfully simulated key aspects of the onboard event in our laboratory and are moving forward with developing design fixes," said Scott Fancher, vice president and general manager of the 787 program, in a press release. "Boeing is developing a plan to enable a return to 787 flight test activities and will present it to the U.S. Federal Aviation Administration (FAA) as soon as it is complete." The company said its engineers have determined the fire, which led to an emergency evacuation of the ZA002 test plane upon its landing at the airport in Laredo, Texas, was prompted by "either a short circuit or an electrical arc in the P100 power distribution panel, most likely caused by the presence of foreign debris." Boeing said it's still figuring out how long it will take to complete the design changes, and it expects to finalize a revised 787 program schedule "in the next few weeks." "Our team is focused on developing these changes and moving forward with the flight test program," said Fancher in the statement. "The team in Laredo is also well along in preparing to return ZA002 to Seattle." Boeing shares rose $1.81, or 2.9%, to close at $65.41 on Wednesday. Year-to-date, the stock is up 17.5%, although it's pulled back 14% since hitting a 52-week high of $76 on April 22. Media reports this week speculated the fire may have been caused by a stray tool, but according to the statement, this doesn't appear to be the case. Boeing's current target for delivery of its first 787 plane is the middle of the first quarter of calendar 2011. Wedbush Morgan issued a research note on Monday saying it believes a further delivery delay is "now all but assured." Wedbush, which maintained an outperform rating and 12-month price target of $86 on the stock, now believes the most likely scenario is for a first delivery in the second quarter "with a chance of it being as late as the end of 2011."
As a result, the firm cut its 787 delivery target for 2011 to 14 from 22, but gave a bullish assessment of the long-term outlook for the shares. "We believe Boeing stock will outperform over the cycle, but near-term headwinds from the 787 will keep the stock range bound in the $60 to $70 range," Wedbush said.