Is Boeing stock a buy? As previously discussed, there's a healthy bull and bear debate around Boeing stock, and Melius Research has come down on the bullish side, citing confidence in relatively new CEO Kelly Ortberg's turnaround plans. Buoyed by its recent win over Lockheed Martin for the next-generation air dominance (NGAD) F-47 fighter, the analyst shares management's enthusiasm over the deal. Indeed, investors have reason to be confident because the deal is widely reported to be a "cost-plus" deal, rath ...

Group 1: Contract Wins and Revenue Stability - Boeing secured a $240 million contract from the U.S. Army Special Operations Aviation Command to remanufacture five MH-47G Block II Chinook helicopters, with deliveries set for 2027, increasing the total number of MH-47G Block II aircraft under Army contract to 51 [1] - The recent military contract wins reinforce Boeing's prominence in defense aviation and ensure long-term revenue stability, potentially encouraging investors to consider adding Boeing to their portfolios [2] Group 2: Stock Performance - Boeing's shares have risen 1.2% year-to-date, outperforming the S&P 500's loss of 3.3%, but lagging behind the Zacks aerospace-defense industry's rise of 4.1% and the broader Zacks Aerospace sector's growth of 4.5% [3] - Other aerospace companies like Embraer and Airbus have seen significant stock gains, with Embraer up 29.4% and Airbus up 14% year-to-date [4] Group 3: Growth Drivers - Boeing has secured numerous contracts in both commercial and defense aerospace, including a landmark order from Korean Air for up to 50 widebody airplanes and an order from Japan Airlines for 17 737-8 jets [5] - The demand for air travel and the replacement of aging fleets are expected to drive the need for new jets and aftermarket services, contributing to Boeing's growth [7] - Boeing forecasts a $4.4 trillion market opportunity for commercial aviation support and services from 2024 to 2043, which should benefit its jet service business unit that had a backlog of $21.40 billion as of December 31, 2024 [8] Group 4: Earnings Estimates - The consensus estimate for Boeing's long-term earnings growth rate is 17.4%, higher than the industry's 11.2% [10] - For first-quarter 2025, Boeing's sales estimate suggests a 16.9% improvement year-over-year, while full-year 2025 sales are expected to increase by 25.7% [11] - However, first-quarter 2025 earnings estimates indicate a decline of 24.8%, while the full-year 2025 earnings estimate shows an improvement of 89.1% [11] Group 5: Challenges and Risks - Boeing faces challenges such as persistent supply-chain issues affecting the global aviation industry, which could impact operational performance [15] - The estimated number of aircraft deliveries for 2025 has dropped to 1,802, indicating a 21.4% reduction in capacity due to ongoing supply-chain issues [16] - Boeing's trailing 12-month return on invested capital (ROIC) is negative and lags behind the industry's return, suggesting insufficient returns on investments [17]

Core Viewpoint - The article emphasizes the importance of analyzing orders and deliveries for Boeing and Airbus to identify investment opportunities in the aerospace, defense, and airline sectors [1]. Group 1: Company Analysis - The article highlights the return of monthly comparisons between Boeing and Airbus, focusing on their orders and deliveries rather than determining a clear "winner" [1]. - The analysis is driven by data-informed insights, aiming to provide context to developments in the aerospace industry that could impact investment theses [1]. Group 2: Industry Insights - The aerospace, defense, and airline industry is characterized by significant growth prospects, making it a focal point for investment research [1]. - The investing group associated with the article offers direct access to data analytics monitors, enhancing the ability to track industry trends and performance [1].

Core Viewpoint - Boeing has appointed Eric Hill as vice president of Investor Relations, succeeding Matt Welch who has been promoted to CFO of Boeing Commercial Airplanes [1][2] Group 1: Leadership Changes - Eric Hill will lead Boeing's engagement with the investment community, focusing on providing timely and transparent information regarding the company's market environment and performance [1] - Hill's previous experience includes serving as vice president of Finance for Mobility, Surveillance & Bombers within Boeing Defense, Space & Security, and holding finance leadership roles on various aircraft programs [2] Group 2: Company Overview - Boeing is a leading global aerospace company and a top U.S. exporter, involved in the development, manufacturing, and servicing of commercial airplanes, defense products, and space systems for customers in over 150 countries [3] - The company emphasizes innovation, economic opportunity, sustainability, and community impact, underpinned by core values of safety, quality, and integrity [3]

Core Insights - BAE Systems recognized 87 top suppliers for its U.S. maritime business during the 'Partner2Win' Supplier symposium, highlighting the importance of collaboration in ship maintenance and modernization projects for the U.S. Navy and commercial vessels [1][3]. Group 1: Supplier Recognition - A total of 48 gold, 27 silver, and 12 bronze awards were presented to suppliers, showcasing the diverse contributions from both large and small businesses [6]. - The 2024 Subcontractor of the Year award went to Allied United, which provided security services at all three BAE Systems U.S. shipyards [6]. - AMP United was recognized as the 2024 Small Business Supplier of the Year, supporting 14 major ship repair projects, with small businesses accounting for about 40% of the Ship Repair business's sales in 2024 [6]. Group 2: Industry Context - The Shipbuilders Council of America emphasized a pivotal moment for the shipbuilding and repair industry, noting unprecedented attention on peace-time shipbuilding since the 1970 Merchant Marine Act [4]. - BAE Systems' Ship Repair business leader echoed the need for expanding ship repair opportunities and improving the overall health of the industry [4]. Group 3: Future Developments - BAE Systems plans to commission a new 25,000 lifting ton shiplift and a four-acre land-level repair facility in Jacksonville later this year, indicating a commitment to enhancing operational capacity [5]. - The company operates three full-service shipyards in California, Florida, and Virginia, providing a wide range of services including ship repair, maintenance, and modernization for the U.S. Navy and commercial vessels [7].

Group 1 - The core viewpoint of the article highlights the significant performance of Magellan Aerospace, which has seen a stock price increase of nearly 38% since a previous buy rating was issued, outperforming the S&P 500's 2.6% increase during the same period [2]. - The investing group, The Aerospace Forum, aims to identify investment opportunities within the aerospace, defense, and airline sectors, leveraging data analytics to inform investment strategies [2]. - The analyst's background in aerospace engineering provides a unique perspective on the industry, allowing for a comprehensive analysis of developments and their potential impact on investment theses [2]. Group 2 - The article emphasizes the importance of data-informed analysis in driving investment ideas, suggesting that the aerospace and defense sectors have significant growth prospects [2]. - The performance of Magellan Aerospace aligns with the analyst's projections, indicating a successful investment strategy within the aerospace sector [2].

Core Insights - Boeing is experiencing a positive turnaround, securing significant defense contracts and new aircraft orders, which may enhance investor and customer confidence [1][8][9] - The company has seen a stock price increase of approximately 16% over the past six months, indicating a recovery from earlier lows despite broader market challenges [2] - Analysts project a future price target of $196 for Boeing shares, suggesting optimism about the company's prospects [3] Aircraft Orders and Production - Korean Air has finalized an order for 20 Boeing 777X planes, following similar orders from Japan Airlines and Malaysia Airlines for 17 and up to 60 new 737 Max aircraft, respectively [4] - The 777X program is significantly delayed, with its launch now expected in 2026, while the production of the 737 Max is currently capped at 38 units per month [4][5] - Boeing's backlog exceeds 6,000 aircraft, reflecting customer confidence despite previous delivery slowdowns [5] Leadership and Operational Improvements - CEO Kelly Ortberg aims to increase the 737 Max production rate to 42 units per month by year-end, contingent on meeting quality and safety standards [6] - The company plans to close the "shadow factory" for quality fixes, which is expected to enhance operational efficiency [6] - United Airlines' CFO expressed confidence in Boeing's delivery schedule, highlighting improvements in reliability as a supplier [7] Defense Contracts and Future Outlook - Boeing secured a $20 billion contract for the F-47 fighter jet, which is expected to bolster its defense business and improve employee morale [8][10] - The contract is seen as a significant boost for Boeing, especially after challenges faced in other defense programs [9][10] - Analysts believe that the new defense program will help attract and retain engineering talent, aiding in the company's cultural recovery [10][11]

Core Viewpoint - Boeing has become a contentious topic among investors, with analysts holding starkly different views on the stock's future performance, as evidenced by contrasting ratings and price targets from Wells Fargo and Citi [1] Bearish Perspective - The Wells Fargo analyst argues that Boeing is far from achieving its 2025 investor day outlook of $10 billion in free cash flow (FCF), with a consensus forecast predicting an outflow of $4.9 billion in 2025, followed by a mere $5.7 billion in FCF generation [2] - The difference between total FCF and FCF per share is significant; with a share count increase to approximately 739.3 million, the projected FCF per share would only be $7.7 billion in 2026, far below the earlier estimate of $16.66 per share [3][4] - Production issues, including quality control and supply chain disruptions, have led to a reduced production target of 38 planes per month for the 737 MAX by 2025, down from the previously expected 50 planes [5] - The defense segment, Boeing Defense, Space & Security (BDS), is also underperforming, with expectations of breakeven cash flow pushed to 2026 or 2027 due to ongoing charges and delays [6] - The analyst from Wells Fargo believes Boeing will fall short of the Wall Street consensus for FCF of about $9 billion in 2027 by at least $1 billion, justifying a sell recommendation [7] Bullish Perspective - Conversely, a Citi analyst highlights Boeing's long-term potential, suggesting that much of the negative news is already reflected in the stock price, and even modest FCF generation could lead to significant share appreciation [8] - The commercial aerospace market outlook remains positive, with Boeing and Airbus maintaining multiyear backlogs and airlines showing consistent demand for new aircraft [9] - A hypothetical scenario where Boeing achieves $7 billion in FCF in 2027 would result in a market cap trading at 18 times FCF, which is favorable for a company expected to grow as production ramps up [10] Investment Strategy - The current market conditions suggest a cautious approach, with the bearish perspective potentially being overly focused on past performance, while the bullish view relies on long-term assumptions that may be difficult to trust given Boeing's recent operational challenges [11][12] - A prudent strategy may involve monitoring Boeing's progress on key objectives, such as increasing 737 MAX deliveries and returning the BDS segment to profitability [13]

Core Viewpoint - Boeing has secured a significant contract from the Department of Defense, leading to a 3.1% increase in its stock, while Lockheed Martin's stock fell by 5.8% due to losing the contract [1] Boeing - Boeing has faced numerous challenges over the past five years, including the suspension of its dividend in March 2020 due to the COVID-19 pandemic and issues with the Boeing 737 Max, including a recent investigation revealing quality control problems [3][5] - The company anticipates a ramp-up in new aircraft versions and expects to reduce losses in its Defense, Space & Security segment, guiding for positive free cash flow (FCF) in the second half of 2025 [4] - Boeing's backlog has grown significantly, reaching $521 billion at the end of 2024, with 5,500 commercial airplanes ordered, indicating strong demand despite execution challenges [5] - Analysts project further losses in 2025, but expect a turnaround with earnings per share (EPS) of $4.23 starting in 2026, making the stock potentially attractive if the company can manage its backlog effectively [6] Lockheed Martin - Lockheed Martin is characterized by its profitability and a consistent dividend increase for 22 consecutive years, with a valuation of less than 20 times trailing earnings and free cash flow [7] - The company has experienced weak growth recently, highlighted by a disappointing quarter and guidance, leading to a 9.5% decline in stock year-to-date [8][9] - Lockheed's adjusted EPS guidance for 2024 is between $27 and $27.30, with a projected EPS of $29.75 in 2026, indicating modest growth of 6.3% compared to 2024 [9] - Unlike Boeing, Lockheed has a strong track record of managing its backlog and delivering profitable programs, such as the F-35 fighter jet [10] Investment Considerations - The choice between Boeing and Lockheed Martin depends on investment objectives and risk tolerance; Boeing presents higher risk with potential for greater rewards, while Lockheed offers stability and consistent dividends [11][12] - Boeing's balance sheet is weaker than Lockheed's, with a financial debt-to-equity ratio of 0.4 and a debt-to-capital ratio over 100%, suggesting a need for financial improvement before reinstating dividends [13]

Core Points - A federal judge has set a trial date for June 23 in the Justice Department's criminal fraud case against Boeing related to alleged misrepresentations about the 737 MAX [1] - Boeing previously agreed to plead guilty to a criminal fraud conspiracy charge and pay a fine of up to $487.2 million following two fatal crashes [2][5] - Boeing is reportedly seeking to withdraw the existing plea deal, while the Justice Department and Boeing are engaged in discussions for a resolution [3] Legal Proceedings - The plea deal included a commitment from Boeing to spend $455 million on safety and compliance improvements over three years, under court supervision [4] - Relatives of the victims from the crashes have criticized the plea agreement as insufficient and are urging for a full prosecution instead [6] - The Justice Department found Boeing had violated a previous agreement that protected it from prosecution, leading to the current charges [8] Industry Context - The ongoing legal issues highlight significant safety and quality concerns within Boeing, exacerbated by a recent incident involving an Alaska Airlines jet [8][11] - Officials have called for stricter regulatory measures against Boeing and the aviation industry as a whole [10]