UPDATE 1-Morgan Stanley sees Boeing's 787 first delivery in 2011

June 24 (Reuters) - Morgan Stanley said it expects the first delivery of Boeing Co's (BA.N) Dreamliner to be pushed to 2011 and downgraded the stock to "equal-weight" on Wednesday, a day after the planemaker postponed the first test flight of the 787 plane for a fifth time.

"We prefer to stay on the sidelineswhile Boeing resolves material issueswith the 787 program," said Morgan Stanley, which previously rated the stock "overweight."

On Tuesday, Boeing said it delayed the test flight to reinforce an area within the side-of-body section of the aircraft. Boeing gave no new date for the flight or the first delivery, which also would be rescheduled.

The revolutionary carbon-composite aircraft, already two years behind its original schedule, was to fly in the second quarter of 2009 with the first delivery scheduled for the first quarter of 2010. [ID:nN23546619]

The delay driven by unexpected stress on the plane parts and the management's limited knowledge of this development shows that this program is too risky to warrant an overweight rating, analyst Heidi Wood said in a note to clients.

That the models did not predict these stress points could result in the Federal Aviation Administration seeking more data, which could slow down the certification process, she added.

"What worries us is the potential for more negative insights through the certification phase," Wood said, adding that the risk of further negative developments and rising costs ahead is higher than originally anticipated.

The analyst also lowered her 12- to 18-month price target on the stock to $50 from $60.

Beyond market driven action, Boeing could be range bound between $35 and $50 potentially through the rest of this year, she noted.

Boeing shares were down about 2 percent at $43.17 in trading before the bell. They had closed at $43.87 Tuesday on the New York Stock Exchange. (Reporting by Dhanya Ann Thoppil in Bangalore; Editing by Himani Sarkar)