The Boeing Company (BA) shares fell nearly 10% during Thursday's session amid ongoing concerns over the 737 MAX. While Boeing plans a recertification flight later this month, the company sent the opposite message to Spirit AeroSystems Holdings, Inc. (SPR) – a key supplier – telling it to pause production work on four shipsets and avoid starting production on 16 others for 2020.
Investors are concerned that less production in 2020 could translate to a further delay in the 737 MAX timeline or a slower-than-expected rate of deliveries. In May, the company delivered four planes and received orders for nine non-passenger planes. However, the company also received 18 cancellations, including 14 cancellations for 737 MAX.
Despite these concerns, Susquehanna reiterated its Positive rating and raised its price target on Boeing shares from $175 to $240. Analyst Charles Minervino sees an early-stage recovery in commercial aviation and several catalysts for the stock, including the lifting of air travel restrictions and the recertification of the 737 MAX over the coming months.
From a technical standpoint, Boeing stock fell to trendline support at around $184.00. The relative strength index (RSI) fell to a moderate 57.16, and the bullish moving average convergence divergence (MACD) move may have peaked in recent sessions. These indicators suggest that the stock could see further downside over the coming sessions.
Traders should watch for a rebound from trendline support to retest prior highs of around $234.20 over the coming sessions. If the stock breaks down, traders should keep an eye out for a move to the 50-day moving average at $145.44 or toward prior lows of around $113.89 over the coming sessions. Much of this price action will be driven by news of a 737 MAX recertification flight.
The author holds no position in the stock(s) mentioned except through passively managed index funds.