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Analysts at Baird on Monday recommended buying shares of aviation manufacturers on weakness after aviation officials ordered airlines to ground the 737 Max 9 made by Boeing (NYSE:BA) following a midair emergency.
“Investors should add original equipment manufacturer stocks Boeing (BA), Howmet Aerospace (NYSE:HWM), Spirit AeroSystems (NYSE:SPR) if weak, as we do not expect this temporary grounding to result in a further widespread issue,” Peter Arment, analyst at Baird, said in a January 8 note to clients. “While quality control remains an overhang at Boeing (BA) and Spirit (SPR), we expect the approximately 215 737 9 Max aircraft in service globally to be completely inspected within days.”
The Federal Aviation Administration on Saturday issued an emergency order to temporarily ground 737 Max 9 jets. The directive came a day after an Alaska Airlines (NYSE:ALK) flight was forced to make an emergency landing when a metal panel plugging an unused emergency exit blew out of the plane’s cabin shortly after takeoff. Pilots returned the plane safely to Portland International Airport.
“We do not expect the Alaska Airlines (ALK) incident to cause any fallout regarding the 737 Max production system as we see this as a manufacturing quality control issue versus design-related,” according to Baird.
The firm has Outperform ratings on Boeing (BA), Howmet (HWM) and Spirit (SPR).
Analysts at other Wall Street firms differed in their opinions. Morgan Stanley said it was bearish on Boeing (BA) because of ongoing quality-control issues, while Citibank said the 737 Max 9 accident was an isolated incident.
