Is Boeing's Growth Still Shackled by Continued Problems in Its 737 Program?

Core Insights - Boeing has shown resilience in its commercial aerospace segment post-pandemic, but the 737 MAX program faces ongoing scrutiny and challenges that may hinder growth [1][9] Production and Regulatory Challenges - Following a door-plug detachment incident, the FAA has limited Boeing to 38 737 jets per month, a target only achieved in May 2025, with future production goals of 42 and 47 jets per month appearing overly optimistic due to labor shortages and supply constraints [2][4] - Spirit AeroSystems, Boeing's main supplier for 737 fuselages, is experiencing financial and operational difficulties, which could further delay production [3][9] - Increased FAA oversight and stringent inspections add complexity to Boeing's production ramp-up, creating uncertainty regarding regulatory clearance [4][9] Financial Performance - Boeing's 737 deliveries increased in Q1 2025, leading to a 56.7% revenue boost in its commercial unit, but concerns about the sustainability of this growth persist due to regulatory and supply chain risks [5][9] - Boeing's stock has risen 20.6% year-to-date, compared to a 25.5% increase in the aerospace-defense industry [8] Competitive Landscape - Supply chain issues are affecting the entire aerospace industry, including Boeing's competitor Airbus, which has had to reduce its production targets for 2024 [6] - Airbus has managed supply chain disruptions more effectively than Boeing, achieving higher aircraft deliveries in Q1 2025, with 136 commercial aircraft delivered compared to Boeing's 130 [7] Valuation and Estimates - Boeing is currently trading at a forward 12-month sales multiple of 1.80X, which is approximately 17.4% lower than the industry average of 2.18X [10] - The Zacks Consensus Estimate projects a year-over-year sales increase of 25.6% for 2025 and 16.2% for 2026, with EPS estimates trending higher over the past 60 days [11]