This morning, Morgan Stanley (MS) aerospace analyst Heidi Wood downgraded Boeing (BA) from "equal weight" to "underweight" -- cutting her price target from $50 to $43, according to The Seattle Times. Translation: Get out of this stock! Boeing, which reports earnings Wednesday morning, is down over three percent in later afternoon trading.

I spent hours talking with Wood for my book, You Can't Order Change, and more than anything else she said to me, the one thing that sticks in my mind was her first reaction when Jim McNerney took over in July 2005 as Boeing's CEO: "Don't f$%^ it up!"

And truly, McNerney has done just that. I have not spoken with Wood about this, but in her report she throws cold water on a statement by Scott Fancher, vice president and general manager of the 787 Dreamliner program which has a $110 billion backlog of 850 aircraft: "We continue to be on track to fly the 787 by the end of the year." In her view, the 787's first flight will be delayed into 2010 and she is even more concerned that "first delivery could be 6 months delayed to Spring 2011."

As Wood wrote, "We would not be surprised to see delayed first delivery and program ramp given scope of redesigns, weight overruns, high fuel burn, and high manufacturing costs." And after reports I received in August that the 787 was having problems with its Electrical System and its Environmental Control System, this latest bad news for Boeing comes as no surprise to me whatsoever.

Boeing has been working overtime trying to spin the media that everything is going to be just fine. But after missing six deadlines, it looks like Boeing is losing the credibility battle on many different fronts. Now Wood, who was a big McNerney supporter, must be regretting that support.

What remains to be seen is how much Wood's disappointment costs shareholders.

Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.


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