After years of turbulence, it appears that Boeing (BA) is finally gaining altitude. The aerospace giant just reported one of its most optimistic quarters in recent memory, with improved operating efficiency, increased revenue, and the long-awaited return to positive free flow. BA shares have gained 30% over the past year, outpacing the S&P 500 Index ($SPX)’s 18% gain. Year to date (YTD), BA shares are up 11%, slightly below the market gain of 16%.
Wall Street rates BA stock a “Strong Buy,” indicating high confidence in the company’s growth prospects, financial health and share price potential, making it a profitable trade by 2025. Should You Buy Boeing Stock Now?
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Valued at $150.5 billion, Boeing is one of the world’s largest aerospace and defense companies, designing, manufacturing and selling commercial aircraft (such as the 737, 787 Dreamliner and 777). It also manufactures defense, space and security systems, including fighter aircraft, military drones, satellites and spacecraft. Essentially, Boeing’s largest customers are a combination of the world’s leading airlines and major government, military and space organizations.
Boeing’s turnaround story continues to gain height. Third-quarter revenue soared 30% year-over-year (YoY) to $23.3 billion, driven by improved operational performance, higher commercial deliveries and steady defense volume. Importantly, Boeing reported positive free cash flow of $238 million, its first since the end of 2023. This marked a critical milestone in the aerospace giant’s post-crisis recovery.
The company’s Boeing Commercial Airplanes (BCA) business delivered 160 aircraft, its best quarterly total since 2018, and revenue rose more than 50% to $11.1 billion. Despite significant costs related to the delayed 777X program, the company continues to grow. Orders also came in for a net total of 161, including 50 Dreamliners ordered by Turkish Airlines and 30 737-8 aircraft from the Norwegian group. This raised the trade backlog to $535 billion and more than 5,900 aircraft.
Additionally, the 737 program stabilized at 38 aircraft per month and is now increasing to 42 per month following FAA approval. Boeing also finished reworking all pre-2023 aircraft and closed its shadow factory, signaling a return to smoother, more efficient operations. The 787 Dreamliner program delivered 24 aircraft in the quarter, reducing inventory of older aircraft to just 10. Boeing anticipates delivering the units by 2026, in line with airline fleet projections.
Boeing’s Defense, Space and Security (BDS) segment reported a 25% increase in revenue to $6.9 billion, with an operating margin of 1.7%. The company recently delivered its 100th KC-46 tanker and received a $2.8 billion contract from the U.S. Space Force for the Evolved Strategic SATCOM Program, strengthening its leadership in national security space systems.
Additional gains in the quarter included $2.7 billion in multi-year contracts for PAC-3 candidates, expanding Boeing’s military portfolio. These new orders have raised the segment’s order book to a record $76 billion.
Additionally, Boeing’s Global Services (BGS) business continues to generate steady profits. Revenue increased 10% to $5.4 billion, while operating margins improved to 17.5%, due to strong business volume and a favorable mix. The unit received $8 billion in new orders and continues to increase its digital and analytics capabilities.
Despite all the encouraging news about the company’s comeback, Boeing’s $4.9 billion charge to reset the 777X development schedule was a brief setback in the quarter. Boeing’s first delivery is now scheduled for 2027, instead of 2026. The delay is due to the postponement of FAA authorization for the next phase of certification. However, Boeing emphasized that the program is technically sound and that successful test flights already provide critical verification data.
This delay will cause a $2 billion hit to 2026 cash flow. However, according to management, this will become a tailwind later in the decade as delayed deliveries are completed. Boeing ended the quarter with $23 billion in cash and marketable securities, $53.4 billion in debt and $10 billion in undrawn credit facilities, which can be used as a backup fund if the business requires additional cash. Even with rising capital expenditures of about $3 billion for the year, Boeing expects positive cash flow in the fourth quarter and free cash flow utilization of about $2.5 billion in 2025, assuming no external shocks.
Overall, analysts are strongly bullish on BA stock, with 19 of the 25 who cover it rating it a “Strong Buy.” Additionally, two say it’s a “Moderate Buy,” three rate it as a “Hold,” and one says it’s a “Strong Sell.” Their average price target is $256.71, suggesting a 30% upside potential from current levels. Furthermore, its high price target of $287 implies that BA stock can rise 45% over the next 12 months.
While the 777X delay is only a temporary setback, Boeing’s overall turnaround story looks promising. The company is delivering more aircraft, stabilizing production and winning large contracts in the commercial, defense and services segments. Boeing is restoring investor confidence with an order book of more than $600 billion, positive cash generation and improved operational discipline. For long-term investors, the aerospace giant’s strengthening fundamentals and recovery margins make it a strong argument to buy and hold BA shares.
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On the date of publication, Sushree Mohanty had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
