Aerospace major Boeing (NYSE:BA) dropped in trading after it withdrew a safety exemption request for its 737 MAX 7, as it faces pressure after the cabin blowout incident. While nobody was injured in the incident, it raised significant concerns about the safety of Boeing’s planes and has invited scrutiny from the U.S. Federal Aviation Administration (FAA).
This has also hampered the company’s production line. In addition, one of its suppliers, Air Lease Corp (NYSE:AL), stated that if there are any more production issues with Boeing, then the Federal Aviation Administration (FAA) will likely step in and halt production altogether.
Boeing’s safety exemption for the 737 Max 7 airplane would have resulted in the 737 Max 7 being certified speedily before any design changes were made. However, with the withdrawal of the safety exemption, the company’s Max 7 and 10 aircraft will require design changes to the nacelle. The nacelle is a structure that holds the aircraft engine and is prone to overheating, which could lead to severe engine damage.
The company is expected to report its fourth-quarter results on January 31.
Is BA a Good Buy Right Now?
Analysts remain cautiously optimistic about BA stock with a Moderate Buy consensus rating based on 17 Buys and six Holds. Over the past month, BA stock has declined by more than 15%, and the average BA price target of $269.20 implies an upside potential of 34% at current levels.
