Bank of America Merrill Lynch cut its rating on Boeing to neutral from a buy Monday, saying it expects production to be delayed by six to nine months.
Raymond James downgraded Southwest Airlines stock and lowered its earnings projections, citing concerns that the grounding could last through peak summer travel.
Southwest has 34 Max jets out of its fleet of about 750 aircraft, accounting for roughly 4 percent of its passenger capacity.
The airline, which reports earnings April 25, said it expects to lose $150 million in revenue in the first quarter of 2019 due to the Max groundings, among other factors like weather-related cancellations, maintenance issues and slowed travel demand. Raymond James said groundings were a "one time" situation, and it expects recuperation through maintenance credits or lower ownership costs of future aircraft.
American Airlines said it's extending cancellations of 90 daily flights involving the 737 Max jet by more than a month to June 5.
Raymond James downgraded Southwest from the equivalent of a buy rating to a hold rating, and lowered its earnings-per-share estimate by 5 cents to $4.40.
"The reputational loss from these events could erode long-term market share and pricing power of the 737 MAX," BofA analyst Ronald Epstein said in a note to clients. "A six-month delay also means lower margins due to penalties owed to customers, weaker negotiating position with airlines as airlines consider cancellations, and operational inefficiencies from the production disruption."
Boeing is slashing 737 Max production by 20 percent as it tries to find a software fix to get the jets back in the air. The company's shares have have fallen nearly 9 percent in the past month.