• Boeing stock dropped 3.6% on Monday.
  • A Boeing 737-800 crashed in southern China on Monday morning.
  • The plane was at cruise altitude when a sudden descent occurred.

Shares of Boeing (BA) retreated 3.6% on Monday after one of the company's 737-800s piloted by China Eastern Airlines crashed in Guangxi, China, with 132 people on board. It was the first time in 12 years that a Chinese-piloted passenger plane crashed. The country is known for strict safety regulations. Early information suggests that the plane was at cruise altitude when it violently descended, and some aviation experts are saying that this makes it unlikely the manufacturer is at fault. BA shares are flat in the premarket.

Boeing Stock News: Crash unlikely to be Boeing fault

Early signs point to the deadly crash not being Boeing's fault as the plane was at cruising altitude before its inexplicable descent, but few details have yet emerged. Boeing is just recovering its reputation from the 737 MAX 8 crashes that happened in Ethiopia and Indonesia about three years ago. In those cases, software glitches related to the MAX 8 autopilot led to aircraft handling problems during the plane's initial ascent.

In an interview with Reuters, Dan Elwell, a former Federal Aviation Administration administrator, said, "Accidents that start at cruise altitude are usually caused by weather, deliberate sabotage, or pilot error."

More than 4,200 737-800s are in use around the world, about 1,200 of those in China alone. China Eastern immediately grounded all 225 of its 737-800 models.

From Reuters: "Jefferies analysts said China's aviation regulator was unlikely to ground the 737-800 fleet unless it specifically suspected a technical failure as the root cause because of the operational consequences of grounding more than 1,000 planes in the world's second-biggest domestic aviation market."

BA key statistics

Market Cap $114 billion
Price/Earnings N/A
Price/Sales 2
Price/Book N/A
Enterprise Value $157 billion
Operating Margin -1%
Profit Margin

-7%

52-week high $260.48
52-week low $167.58
Short Interest 1%
Average Wall Street Rating and Price Target Buy, $186.31

Boeing Stock Forecast: Where to?

Boeing stock has been in decline since March 15, 2021. Since then BA shares have mostly traded inside a descending price channel with a breadth of $50 to $60. With the uncertainty around the crash, expect BA stock to drift down toward $160. Monday's reticent move, however, demonstrates that the airline stock will likely remain within the year-old price channel. Support should apply somewhere in the low $160s based on the bottom trend line.

In order to break higher, BA stock first needs to conquer the 20-day moving average at $187.61. The 50 and 100-day moving averages then sit near $101 and $104, respectively.

BA stock chart

BA 1-day chart

 

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