Can Boeing's Recovery Story Defy Its Biggest Hurdles Yet?

Core Viewpoint - Boeing Co. reported a mixed quarter with strong commercial momentum but ongoing challenges from the 777X program, leading to a decline in share price [1] Group 1: Operational Performance - Operational stability is improving in Boeing's commercial business, aided by the FAA's approval to increase 737 output to 42 jets per month and maintain 787 production at seven per month [2] - The company is making steady progress in restoring execution discipline and supply chain reliability, despite a $4.9 billion charge related to the 777X program and its delayed entry into service until 2027 [3] Group 2: Future Projections - Analyst Ronald J. Epstein expects 737 production to reach 47 jets per month by late 2026 and 787 output to increase to 10 per month by 2027, indicating a positive long-term growth trajectory for Boeing [3] - The forecast for 2026 free cash flow is $3.7 billion, revised down from $4.7 billion, with an expectation to rise to $8 billion by 2028 as deliveries normalize [4] Group 3: Market Sentiment and Valuation - Epstein maintains a Buy rating with a price target of $270, based on normalized free cash flow of $10 per share and valuation parity with the S&P 500 multiple [4] - Despite risks from program delays and cost overruns, Boeing's improving operations, a $600 billion backlog, and the planned acquisition of Spirit AeroSystems are expected to support a more stable outlook [5]