Home News Buy Boeing shares because the 737 Max is 'too big to fail,' analyst says – CNBC

Buy Boeing shares because the 737 Max is 'too big to fail,' analyst says – CNBC

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Analysts at Berenberg are calling Boeing a “tough sell” as they see the 737 Max model that had two deadly crashes as “too big to fail” for the company and the industry.

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“The 737 MAX is Boeing’s most important programme, generating 33% of group revenue, contributing over 50% of profit, and with a backlog of over 4,600 aircraft,” Berenberg’s Andrew Gollan said in a note on Wednesday. “There is no meaningful alternative to support mass switching. It will be unrealistic for the market to reject the platform outright.”

Berenberg kept its buy rating on Boeing, betting that the primary factor in the two deadly crashes is the flight control system, which the Federal Aviation Administration is expected to sign off on the software fix on March 25. The analyst expect the impact to be temporary and the grounded fleet to be back in service in the third quarter.

Ethiopian Airlines Flight 302, a Boeing 737 Max 8, went down shortly after takeoff from Addis Ababa on March 10, killing all 157 people on board. Aviation authorities around the world grounded Boeing 737 Max planes last week after the crash.

Shares of Boeing have dropped 12 percent since the crash on March 10. The stock posted its biggest weekly loss in eight years last week.

“Alongside the Airbus A320, the 737 is crucial for meeting massive global demand for narrowbody capacity over the next decade and beyond. We acknowledge the risk of cancellations in the near term but overall we believe it to be modest,” Gollan said.

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