Bank of America says buy tumbling shares of aviation giant

Boeing (BA) shares fell again this week. The stock closed at $198.20 on Friday, September 18, down 4.83% over the past five trading days and 12.98% year to date.

The drop came after comments from CEO Kelly Ortberg at Morgan Stanley's Laguna Conference on September 16 , where he identified new challenges on the 737 and 787 production ramps, and pushed 777X certification testing further into 2027.

Boeing is already under pressure to prove that its turnaround is feasible, and the CEO's comments only added to investors' caution. Yet, even with the caution, at least one major bank sees the pullback as a chance to add shares of the plane maker at a discount.

Boeing shares slide after CEO's warning on 737 and 777X delays

Ortberg told the audience at the Morgan Stanley conference that the 737 production line has not yet stabilized at the 47-jets-per-month rate Boeing had targeted. The delay is due to in-house production of wings, though Boeing said the broader supply chain is holding up.

On a more positive note, Ortberg said the 737 MAX 10 variant should get its certification "very soon," and told analysts, "When I left Seattle yesterday, I think we had three deliverables to complete."

Ortberg also confirmed that certification testing on the 777X, Boeing's delayed widebody, would extend into 2027. The plane is already about seven years past its original schedule, and its ETOPS certification has been held up by an engine seal issue on the GE Aerospace-built GE9X turbine.

GE Aerospace (GE) responded that certification can move forward with the existing seals, and said the upgraded parts began shipping in August. Boeing designs and builds commercial jets, defense aircraft and space systems, so any issue in the production ramp affects revenue and the delivery schedules airlines have already committed to.

Ronald Epstein calls the market reaction overdone

Bank of America aerospace analyst Ronald Epstein used the selloff to reiterate his Buy rating and $270 price target . Epstein has covered aerospace and defense at Bank of America for over a decade and holds a five-star analyst rating from TipRanks, which makes his call credible with institutional investors.

In a Bank of America Global Research report shared with me, Epstein wrote that Ortberg's comments triggered about a 7% intraday drop in BA shares and said the market reaction was "a bit dramatic." He argued that setbacks were expected from the start.