Boeing is far too risky to buy now, this fund manager says

One of the most durable names in the market has turned into a disaster of a stock to own over the past year. But even if you’re somehow still a fan of Boeing (Boeing Stock Quote, Chart, News NYSE:BA), you should be getting out soon, says portfolio manager Jamie Murray, as the company can no longer rely on its solid history of success to woo investors.

As everyone knows by now, aircraft-maker Boeing has been hit by a double-whammy, first last March with the second crash of one of its 737 Max 8 planes which led to the global grounding of the aircraft and investigations of the company’s practices and then with the COVID-19-inspired decimation of the airline industry worldwide, which has caused airlines to trim or cancel their plane orders in droves.

Murray says it could be a while before Boeing gets back on its feet.

“We’ve been avoiding Boeing. We’ve never owned it in our fund but especially since the two Max 8 issues came up. We still think that’s going to be a headwind for this company going forward,” said Murray, portfolio manager and head of research at the Murray Wealth Group, speaking on BNN Bloomberg on Monday.

“There’s been a big reputation hit at Boeing, even among consumers. From your average person you hear comments like ‘I’m never gonna fly on a Boeing 737 Max in my lifetime.’ Whether people change or that perception changes is to be seen but I think there’s still a lot of risk in this company,” he said.
“And then just with the state of the airline industry, it’s not my preferred way to play,” Murray said.

Boeing last month said it had called upon the US government for $60 billion in federal aid to the aerospace industry, with the company saying that it will ask for loan guarantees for itself rather than grants or government taking a stake in the company.

To see how drastically fortunes have changed for Boeing, for 2019 the company posted its first annual loss since 1997, with the company owning up during its fourth quarter report in January that the 737 Max disaster cost the company about $19 billion, which doesn’t include potential settlements related to over 100 lawsuits from families of those killed in the two crashes.

On the reputation of the 737 Max going forward, CEO David Calhoun said in January, “I can’t market it or merchandise it or hang banners on it or change the name of it. That won’t convince anybody. But when they see it operating and they see it flown and they see pilots getting on, I think we’re gonna be okay.”

For its fourth quarter 2019, Boeing posted an operating loss of $2.53 billion or $2.33 per share compared to a profit of $3.87 or $5.48 per share a year earlier. Since the start of the market pullback in late February, Boeing’s share price has plummeted 58 per cent. (All figures in US dollars.)