Why Boeing Is Emerging As The Ultimate Recovery Play

Core Viewpoint - Boeing Company has shown improvement in free cash flow visibility and a clearer path to normalization, leading analysts to view the fourth-quarter results positively as a credibility reset for the company [1][2]. Financial Performance - Boeing reported approximately $24 billion in fourth-quarter revenue, representing a 57% year-over-year increase, and delivered around $400 million in free cash flow, exceeding expectations and establishing a firmer baseline heading into 2026 [2]. - The company reaffirmed a free cash flow range of $1 billion to $3 billion for 2026, with a base case expectation of around $2 billion [3]. Cash Flow and Production Outlook - Analysts expect Boeing to achieve a normalized cash profile of $7 billion to $9 billion, with potential for over $10 billion in mid-term free cash flow, as the company has outlined specific factors contributing to this transition [4]. - Key cash headwinds for 2026 include higher capital expenditures, impacts from the Spirit AeroSystems deal, ongoing investment in the 777X, and customer-related pressures, although there are expected offsets from inventory reductions in the 737 MAX and 787 [5]. Production and Delivery Targets - Boeing aims for approximately 500 737 MAX and around 95 787 deliveries in 2026, indicating about 10% delivery growth, with plans to increase 737 MAX production from 42 to 47 per month by mid-2026 and targeting 52 per month by early 2027 [6][7]. - The company plans to deliver most of its remaining pre-2022 MAX inventory in the first quarter of 2026, while also aiming for MAX-7 and MAX-10 certification in the second half of 2026 [7]. Valuation and Analyst Ratings - RBC Capital Markets has set a price target of $275 for Boeing, based on a 22.5x multiple of projected 2028 free cash flow of about $10 billion, reflecting confidence in the company's long-term production and cash generation potential [9]. - Other analysts, including UBS and Citigroup, have also raised their price targets for Boeing, indicating a positive outlook on the stock as it approaches its 52-week high [11][12].