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Boeing to possibly cancel the Max 10 – what’s next for BA stock?

Boeing to possibly cancel the Max 10 - what’s next for BA stock
Dino Kurbegovic

It seems as if troubles for Boeing (NYSE: BA) shareholders are not over yet, as the company mulls shelving the Max 10 airplane production. Namely, Dave Calhoun, BA CEO, hinted at this possibility when he gave an interview for the trade publication Aviation Week.

The biggest issue appears to be the Aircraft Safety and Certification Reform Act, enacted by the U.S. Congress in late 2020, which mandates all airplanes certified as of 2023 to comply with the newest crew alert regulations. Meanwhile, the company’s airplanes are under increased scrutiny due to various issues Boeing had recently. 

This, along with the debt that the company took on during Covid lockdowns, looks to be pushing Calhoun towards the possibility of shelving the Max 10.      

“We end up having to face right into that question. If you go through the things we’ve been through, the debts that we’ve had to accumulate, our ability to respond, or willingness to see things through even a world without the -10 is not that threatening.”

BA chart and analysis 

Recently, the price action managed to close above the 20-day and 50-day Simple Moving Averages (SMAs), despite the stock being down 33% year-to-date (YTD). Further, the trading range has settled between $130 and $147 on reduced trading volume, possibly indicating further sideways movement.  

BA 20-50-200 SMA lines chart. Source. data. See more stocks here.

On the other hand, analysts rate the shares a strong buy, predicting that the average price in the next 12 months could reach $213.27, 53.35% higher than the current trading price of $139.07. 

Wall Street BA analysts’ price targets for BA. Source: TipRanks    

Sibling rivalry  

In short, the Max 10 seems to account for roughly 15% of Boeing’s unfulfilled orders for 737 jets; however, the company still produces and sells the Max 8 and Max 9 jets, which fly customers around the globe. 

There is a possibility that customers that want to buy the Max 10 might move to Airbus (OTCMKTS: EADSY) if the airplane gets canceled. 

If this happens, it will represent another victory by Airbus over its rival; yet, BA has strategic importance to the U.S., and a lack of orders by commercial clients might be replaced by government and military bodies.

Regardless, shareholders could expect to see more volatility in the stock in the short term.   

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