Wall Street is starting to bail on Boeing with two big downgrades on Monday

Published Mon, Oct 21 20197:01 AM EDTUpdated Mon, Oct 21 201911:12 AM EDT

New revelations are raising risks for Boeing, and some Wall Street analysts are starting to throw in the towel on plane manufacturer after keeping buy ratings on the stock throughout the 737 Max debacle. Credit Suisse and UBS downgraded the shares to neutral from buy on Monday with both citing the news that broke on Friday that a Boeing test pilot had warned about problems with the 737 Max system implicated in two deadly crashes and said he had "unknowingly" lied to regulators. Two years before the crashes, he complained in the messages that the MCAS flight-control system was difficult to operate. Boeing said Sunday it understood the outcry over leaked messages from the pilot and added it was still investigating what they meant. Boeing shares fell another 1.6% in premarket trading Monday to $338.38 per share, following a 6.8% decline on Friday. Here's what the downgrades said: "Our working thesis has been that the failures on the 737 MAX development by the company centered on fault intolerant design compounded by poor assumptions of pilot response," UBS analyst Myles Walton said in a note. "We now have to append that assessment further based on source material provided to Congress and the FAA on Friday that reinforces the perception of and heightens the potential of incomplete disclosure, which inherently puts more money/trust & time at stake." "We see increasing risk that the FAA won't follow through with a certification flight in November and lift the emergency grounding order in December," the analyst added. UBS lowered its price target to $375 from $470. "We can no longer defend the shares in light of the latest discoveries, discoveries which significantly increase the risk profile for investors," Credit Suisse analyst Robert Spingarn said in a note. "These messages have been broadly published in virtually every major news outlet both domestically and internationally. This may further undermine public confidence in the aircraft, which could have L-T (Long term) demand implications (adding risk to 57/month recovery). That brand damage could also metastasize to other BA products." Credit Suisse lowered its price target to $323 from $416. For the second time in a week, Bank of America also lowered its price target on Boeing. This time the firm went to $370 from $400. "In our view, there is increased uncertainty related to the 737 MAX's return to service timeline, Boeing's culture, brand, and corporate governance," analyst Ronald Epstein said. Boeing shares are down 9% in the last month. --With reporting by Michael Bloom

Credit Suisse and UBS downgraded the shares to neutral from buy on Monday with both citing the news that broke on Friday that a Boeing test pilot had warned about problems with the 737 Max system implicated in two deadly crashes and said he had "unknowingly" lied to regulators. Two years before the crashes, he complained in the messages that the MCAS flight-control system was difficult to operate.

Boeing said Sunday it understood the outcry over leaked messages from the pilot and added it was still investigating what they meant.

Boeing shares fell another 1.6% in premarket trading Monday to $338.38 per share, following a 6.8% decline on Friday. Here's what the downgrades said: