Boeing's Turnaround Gains Momentum as Bernstein Upgrades Outlook Amid Manufacturing Gains and Defense Wins

Boeing’s long-awaited recovery appears to be solidifying, with Bernstein’s recent upgrade to Outperform signaling a critical inflection point for the aerospace giant. Analyst Douglas Harned’s bullish call, backed by a 23% price target upside, reflects growing confidence in Boeing’s ability to stabilize production, navigate regulatory hurdles, and capitalize on defense contracts. Yet, the path remains fraught with geopolitical and operational risks that could test Boeing’s resilience.

Commercial Division: Manufacturing Momentum or False Dawn?

Boeing’s commercial aircraft division, once plagued by safety scandals and production bottlenecks, is now the cornerstone of its revival. Bernstein highlighted progress toward boosting 737 Max production to 38 planes per month by July 2025, with ambitions to hit 42 per month by year-end. Meanwhile, the 787 program has overcome heat exchanger and quality issues, enabling a ramp-up to seven units per month in the second half of 2025.

These targets, if achieved, could alleviate a key constraint: Boeing’s ability to meet demand from airlines eager to modernize fleets. However, delays in certifying the 737-7 and 737-10 variants—critical for filling gaps in the single-aisle market—pose a risk. Bernstein estimates these delays will not derail broader delivery timelines, but any further setbacks could strain investor patience.

Defense Wins: Rebuilding Credibility in a High-Stakes Arena

On the defense front, Boeing’s victory in the F-47 program, a next-gen fighter aircraft contract, marks a turning point. This win, along with its competitive stance in the F/A-XX competition, signals a renaissance for Boeing’s military business, which has struggled with cost overruns and underperformance in recent years.

The defense segment’s success is critical to offsetting commercial volatility. Analysts estimate defense programs could add $40 billion in revenue over the next decade, helping Boeing diversify its earnings and rebuild stakeholder trust.

Risks Linger, but Are They Manageable?

Bernstein acknowledges risks, including tariffs ($400 million annual drag) and unresolved China deliveries (50 undelivered aircraft). Yet, the firm downplays these concerns, noting Boeing can redirect inventory to other markets. The Alaska Airlines incident in January 2024—a door blown off mid-flight—has not dented demand, with airlines continuing to order Max models.

Financial Outlook: Free Cash Flow and Strategic Moves

The planned sale of Jeppesen, Boeing’s navigation software division, for $10.5 billion will bolster liquidity and free cash flow. While near-term earnings were lowered due to commercial cost overruns and tariffs, Bernstein’s long-term forecast assumes Boeing can stabilize margins by 2026.

Conclusion: A De-Risked Path, but Timing is Everything

Bernstein’s Outperform rating hinges on Boeing’s trajectory aligning with pre-2024 expectations, with the stock historically driven by momentum. Shares rose 2% premarket after the upgrade, reflecting investor optimism despite lingering risks.

Crucially, Boeing’s stock has gained only 0.5% year-to-date in 2025, suggesting it remains undervalued relative to its improving fundamentals. The $218 price target—up from $181—implies Boeing could retrace its 2023 surge, when shares doubled before the Alaska incident.

While Boeing is far from out of the woods, Bernstein’s analysis underscores that the company’s operational and strategic steps are de-risking its future. With production ramping, defense wins, and a liquidity boost from Jeppesen, Boeing’s story is shifting from survival to growth. Investors who bet early may find themselves positioned for a rebound, but patience—and a watchful eye on certification timelines—will remain key.

In a sector where setbacks are costly and recoveries slow, Boeing’s progress thus far suggests it’s moving in the right direction—but the full potential of its turnaround may still be ahead.