Boeing Shares Are Trading Lower Wednesday: What You Need To Know

Boeing Inc’s BA shares are trading lower Wednesday. The company may be subject to a potential credit downgrade towards junk status from S&P Global and Moody’s due to strike risks and complicated finances.

What To Know: Boeing’s current credit rating of “BBB” is under negative watch due to a protracted strike by the company's machinist union, which has entered its fourth week. The strike has halted key operations in Boeing’s Pacific Northwest facilities, disrupting production schedules and contributing to financial strain.

The strike is anticipated to cost Boeing over $1 billion per month, with overall cash outflows potentially reaching $10 billion in 2024. This financial impact is compounded by Boeing's plans to overhaul its manufacturing processes and other strike-related expenses. The company's goal of increasing production of its 737 Max to 38 planes per month by the end of 2024 is now in jeopardy. Boeing has withdrawn its latest offer to the union, which included improved wages and retirement benefits, citing the lack of progress in negotiations despite multiple rounds of federal mediation.

Additionally, the U.S. Federal Aviation Administration (FAA) recently issued a warning about a potential rudder system malfunction in Boeing 737 planes, which may lead to jamming due to faulty parts. The FAA alert adds to the company's safety concerns, which have been a persistent issue following past incidents involving the 737 Max. The National Transportation Safety Board (NTSB) has also urged Boeing and the FAA to take swift action to address the rudder issue.

What Else: Boeing's stock has declined significantly over the past year, with a year-to-date drop of 38.57%. Several major investment firms, including Goldman Sachs and Jefferies, have maintained buy ratings on the stock, with price targets ranging from $195 to $240. However, others, such as Wells Fargo, have taken a more cautious approach, issuing an underweight rating with a price target of $110.

BA Price Action: Boeing shares were down by 2.73% at $150.41 at the time of writing, according to Benzinga Pro.

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