Boeing will overcome its current problems, this fund manager says

Boeing (Boeing Stock Quote, Chart NYSE:BA) shareholders may be wondering whether to sell or hold as the market continues to react to the fallout from another Boeing 737 Max 8 fatal crash, the second in five months related to the aircraft.

And while the news has dropped the stock 12 per cent over the past few days, Christine Poole of GlobeInvest Capital Management still has faith in the company and argues that if investors are worried they could take some money off the table now, seeing as they’ve probably fared very well by Boeing over the past couple of years.

News broke on Wednesday that Canada would be joining a growing list of countries to ground Boeing 737 Max 8’s in its airspace, with transport minister Marc Garneau saying that after analyzing data related to the crash in Ethiopia on Sunday which killed all 149 passengers and eight crew aboard.

Poole says the recent moves by governments —including the UK, the European Union, China, Australia and India, and late today the United States— to ground the plane have been notable since it’s more often the case that governments wait for federal regulators to make their determinations before issue such an order.

And while it’s more than likely that Boeing will make its way past this ordeal, the Max 8’s central role in the company’s fortunes is likely to raise concerns.

“This plane is a very important one for Boeing. It’s going to account for a good 30 to 40 per cent of their profits going forward, so it’s an important aircraft,” says Poole, in conversation with BNN Bloomberg on Tuesday.

“Over the long run, I think they will overcome this. They’ve had problems in the past. They had the Dreamliner and they had problems with their battery and they had to ground that. Obviously not as severe because people didn’t die from it,” she says.

The Boeing 787 Dreamliner faced an Federal Aviation Administration review in 2013 after it was found that a number of aircraft had electrical issues connected to its lithium-ion batteries.

After trading sideways for a number of years, Boeing’s share price started to climb in over the last quarter of 2016. As with many names, the stock fell this past October but was rallying to new heights over the months leading up to Sunday’s tragedy. Even with the recent pullback, the stock is up 11 per cent year-to-date.

“If you’ve had huge gains, you could take some of it off and wait on the sidelines,” says Poole. “I think that in the long run we’ll look back at this as an event that happened. Boeing is a great company.”