Most analysts have been slow to issue outright downgrades of Boeing Co. (NYSE: BA) up to and following the FAA and international groundings of the 737 Max planes in the wake of two deadly plane crashes. Some Wall Street analysts have trimmed estimates or price targets, but independent research firm Argus has formally downgraded Boeing to Hold from Buy and removed the near-term $460 target price.

While a downgrade is of course never really a net positive for shareholders, Argus’s John Eade did include a note that the firm has been long-time bullish and that the shares had risen more than 500% since its first May 2012 view. The firm still sees the long-term outlook for Boeing as bright, and over a five-year period Argus is keeping its Buy rating. Boeing shares also were up 1% at $376.04 in mid-afternoon trading despite the downgrade.

The March 10 crash of Ethiopian Airlines Flight 302 followed a prior crash of a Lion Air jet out of Indonesia last October. Boeing’s shares had fallen about 17% from its highs after the second fatal crash. If the cause of the crashes is proven to be a mechanical or an engineering issue, Argus believes that Boeing can correct the problem and the industry can move on.

Boeing also is said to have superior long-term prospects for shareholders with a significant backlog of orders and with a strong presence in the growing commercial aerospace industry. Still, Tuesday’s downgrade said:

In the near term, the company is struggling, along with aviation investigators, to quickly determine the cause of two fatal crashes involving the company’s popular 737 Max jet. Boeing management has not been particularly pro-active in its response, and we think the shares are subject to downward pressure as the investigation plays out in the news. On valuation, our dividend discount model renders a fair value above $460. But we think the investigation is likely to cap multiples, and that earnings forecasts are likely to decline. Until we get some clarity from investigators on the cause of the crashes, and from Boeing on its responses, we think a near-term HOLD rating is appropriate.

Many investors have tried to figure how the 737 Max issues may impact Boeing financially. The 737 Max 8 jet has been a serious source of growth for Boeing. Eade noted:

Last year, the company delivered 806 planes, more than 70% of which were 737s. The list price for the 737 Max 8 jet is around $120 million. There are more than 5,000 of them on order, representing about 85% of the company’s seven-year backlog.

Boeing investors also will need to temper expectations for how fast this issue will be resolved. The Argus report said:

Investigators will first have to determine the cause of the crashes. The cause of the first crash has not been definitively determined, but investigators believe it may involve new automatic controls for a new engine that hadn’t been fully explained to pilots. In the months since that crash, Boeing has provided airlines with additional training. The second crash may have been caused by the same problem, or by a different system malfunction or even pilot error…Boeing will also have to convince its customers to maintain and increase their orders. The main competition for the 737 Max is the Airbus A320, which also scores high in fuel efficiency. Both of these planes are important cogs in air travel today, providing service on short- and medium-haul routes. The industry is very healthy. Global passenger traffic has been growing at a 6% rate, above the 10-year average of 5.5%.

Boeing also has yet to outline what the potential costs will be in terms of direct costs and lost revenues ahead. The first estimate will have to consider how long the investigation will take to determine the cause, and then the estimated costs likely will follow. Argus warned:

Boeing is expected to generate $15 billion in free cash flow this year, suggesting that a six-to-nine month investigation could wipe out cash flow for the year.

In recent days, Barron’s has written that investors may be underestimating Boeing’s problems and that, for now, analysts have been slow to bail on Boeing.

Based on the current available information, Argus believes that Boeing’s stock is fairly valued at current prices near $370 — just above the midpoint of the 52-week range of $292.47 to $446.01. Boeing’s consensus sell-side analyst target price from Refinitiv was last seen at $436.95.

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