Why Boeing (BA) Is a Convincing Buy for 2026 Despite Risks

Boeing (BA) has long been a symbol of American industrial might, but its recent struggles with production delays, regulatory scrutiny, and financial setbacks have left many investors wary. However, as 2026 approaches, a compelling case is emerging for Boeing as a strategic buy. The company's production momentum, defense segment resurgence, and improving free cash flow projections are creating a foundation for long-term recovery, even as risks like the 777X delay and regulatory hurdles persist.

Strategic Recovery: Production Momentum and Analyst Optimism

Boeing's commercial aircraft production is accelerating at a critical juncture. The company has already stabilized 737 production at 38 units per month and plans to increase this to 42 units by late 2025, with further ramp-ups to 47 units by late 2026. This progress has not gone unnoticed: in September 2025, RBC Capital upgraded Boeing to "Outperform", citing positive feedback from the FAA on the 737 MAX and 787 models. Citigroup and JPMorgan have also raised price targets, with Bernstein naming Boeing its top aerospace pick for 2026 at $298.

The production ramp is supported by a $635.7 billion backlog of commercial aircraft orders, including over 5,900 undelivered planes. This backlog, combined with improved quality metrics and FAA-approved production benchmarks, suggests Boeing is regaining control of its operations. As stated by Chief Financial Officer Jay Malave, the company is prioritizing "sustainable production increases" to avoid the costly missteps of the past.

Defense Segment Turnaround: A Hidden Catalyst

While Boeing's commercial division grapples with regulatory challenges, its defense business has become a cornerstone of stability. In Q3 2025, the Defense, Space & Security (BDS) segment secured a $2.8 billion contract with the U.S. Space Force for strategic satellite communications and multiyear missile seeker agreements. This resilience is critical, as the defense segment now accounts for 20% of Boeing's international orders and holds a $76 billion backlog.

The segment's growth is further bolstered by contracts like the $4.7 billion Apache helicopter deal with the U.S. Army. These projects not only offset commercial losses but also provide a steady cash flow stream during Boeing's recovery phase. Analysts note that the defense business's focus on autonomous systems (e.g., the MQ-28 Ghost Bat drone) positions Boeing to capitalize on evolving military technology trends.

Free Cash Flow Potential: A Path to Financial Stability

Boeing's financial trajectory is shifting from crisis to cautious optimism. The company projects positive free cash flow in 2026, a stark contrast to the $2 billion outflow expected in 2025. This improvement stems from higher 737 and 787 deliveries, production efficiency gains, and a reduction in undelivered aircraft inventory. Additionally, the services business has contributed nearly $1 billion in operating profit, demonstrating Boeing's ability to monetize its existing fleet.

Long-term, Boeing aims to generate $10 billion in annual free cash flow by the late 2020s, a goal underpinned by its $635.7 billion commercial backlog and defense contracts. While the 777X delay-a $4.9 billion pre-tax charge-remains a drag, the program's eventual ramp-up in 2027 could unlock further value.

Navigating Risks: Certification Delays and Regulatory Scrutiny

No investment case for Boeing is complete without addressing its risks. The 777X program, now delayed until 2027, and the 737 MAX 10's certification (expected mid-2026) remain significant headwinds. Regulatory scrutiny from the FAA and international authorities also lingers, with some analysts, like Weiss Ratings, downgrading Boeing due to its $9.85 billion four-quarter loss.

However, Boeing's management is taking proactive steps. The company is prioritizing quality assurance and aligning production rates with FAA-approved benchmarks to avoid past mistakes. Moreover, the defense segment's stability and services business profitability provide a buffer against commercial setbacks.

Conclusion: A Nuanced Buy Case for 2026

Boeing's path to recovery is neither linear nor without risk, but the company's production momentum, defense growth, and improving cash flow dynamics make it a compelling buy for 2026. While the 777X delay and regulatory challenges will test its resilience, Boeing's $635.7 billion backlog, strategic cost-cutting, and diversified revenue streams position it to emerge stronger. For investors willing to navigate short-term volatility, Boeing represents a high-conviction opportunity in a sector poised for long-term growth.