Is Boeing Stock One of the Best Picks for 2026?

• The company is making good progress on its 737 MAX production ramp.

• The defense business is now profitable, but risks remain around its fixed-price development programs.

• The delay in the first delivery of the 777X is disappointing, but it won’t detract from the overall narrative surrounding the stock.

• 10 stocks we like more than Boeing ›

boeing (NYSE: BA) The stock got a boost recently when an analyst at Wall Street investment firm J.Morgan He raised the company’s price target to $245 and named the stock as one of the best picks in the sector. The bulls’ short-term logic on the stock is sound, but investors should consider the long-term concerns about Boeing before making a purchase.

The stock is up almost 21% from 2025 and has outperformed the S&P 500 by a few percentage points so far this year. It’s a decent performance and reflects the positive work done by CEO Kelly Ortberg and his team to increase production and deliveries of the 737 MAX in 2025.

The 737 MAX production ramp is the most essential of the three key things the aerospace company needed to do this year. Additionally, Boeing can declare progress on the second key objective: returning the Defense, Space and Security (BDS) segment to profitability while avoiding significant charges on its troubled fixed-price development programs. However, the third key objective of keeping the widebody 777X program on track for first delivery in 2026 was not achieved, and management now expects that to occur in early 2027.

I will look at these issues in reverse order as they are critical to the investment case in 2026.

As a reminder, the original plan for the 777X was to deliver the first aircraft in 2020, and its delay is emblematic of the operational problems Boeing has faced over the past decade. While it is understandable that attention has been focused on the 737 MAX due to its high-profile accidents and groundings, the importance of the 777X should not be underestimated. After all, this is the wide-body aircraft that Boeing hoped would usher in a cycle of investment in wide-body aircraft.

The delay in deliveries (announced in October) is disappointing, but in mitigation, one could argue that it is not entirely Boeing’s fault. In September, Ortberg spoke at a Morgan Stanley conference and told investors: “We are falling behind on certification” with the Federal Aviation Administration (FAA) for the 777X. Fast forward to November, and a technical problem with the GE9X engine, made by GE Aerospacewould have caused the suspension of 777X flights.

While the $4.9 billion charge taken due to the delay is non-cash, there may be a cash impact in 2027 as Boeing may have to pay concessions to customers for delivery delays. Additionally, the delivery delay will cost Boeing money, as it will require keeping inventory and production lines open for another year without actually delivering the 777X aircraft.

The bottom line is that the 777X delivery delay is not good news and will lead to unplanned cash outflows in the future.

The following table says a lot. BDS has struggled in recent years, along with other major defense contractors, with fixed-price development programs. Although they represent only about 15% of BDS’s business, prolonged cost overruns and cost increases have led to a succession of multimillion-dollar charges over the years.

As such, the return to profitability (albeit with a 1.9% operating profit margin for the first nine months) is a welcome development.

That said, in December, the Air Force pushed back by one year its estimate for the first delivery of two Air Force One aircraft (one of four troubled fixed-price development programs for Boeing) to mid-2028. Again, this will likely result in some cash outflow and serves as a reminder that Boeing is not very clear about the issues surrounding these programs.

Saving the best news for last, Boeing managed to stabilize production at a rate of 38 per month on the 737 MAX in 2025. Additionally, the FAA approved an increase in Boeing’s production rate to 42 per month in mid-October. Ortberg plans to increase the rate by five planes a month every six months.

As such, the narrative around Boeing Commercial Airplanes (BCA) could go from struggling to reach 38 per month in early 2025 to reaching 52 per month in late 2026.

Given the importance of the 737 MAX and the potential for a positive flow of production news throughout the year, Boeing is well positioned for an excellent year. Boeing has an order book of more than 4,700 of its 737 MAX aircraft, and consuming that number is the key management objective. Meanwhile, despite the recent disappointment with Air Force One, the BDS is making progress and expectations for the 777X have now been lowered.

It’s shaping up to be a positive year for Boeing, but its execution track record on BDS and the 777X isn’t spotless in 2025, and similar issues could arise in 2026. So Boeing may not be a “first pick,” but rather a cautious buy.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Boeing, GE Aerospace and JPMorgan Chase. The Motley Fool has a disclosure policy.

Is Boeing Stock One of the Best Picks for 2026? was originally published by The Motley Fool