Boeing CEO Sees More Work On Company Turnaround in 2026

Boeing Co. faces a challenging path forward in its 2026 turnaround, according to CEO Kelly Ortberg, who emphasized the need for more work after progress since 2024. In a memo to employees, Ortberg highlighted that the company has made gains since restarting its commercial jet factories, but the road ahead remains difficult. The CEO did not provide specific details about upcoming strategies, leaving investors to await the fourth-quarter earnings update in January.

Ortberg's comments contrast with recent market optimism, as Boeing shares have risen 23% following reaffirmed cash flow expectations. The stock now carries 25 buy ratings, eight holds, and one sell from analysts. Analyst Matthew Akers of BNP Paribas, the lone bear, warned that cash generation may not accelerate as quickly as expected.

UBS highlighted Boeing as a top pick for 2026, citing its expected increase in normalized free cash flow and improved production rates. The firm pointed to recent contract wins, including an $8.6 billion F-15 deal for Israel and an order for 110 aircraft from Alaska Airlines. UBS also noted Boeing's ongoing deleveraging and steady performance in its defense segment.

Why Did This Happen?

Boeing's CEO attributed the company's progress to the resumption of jet production and asset sales after 2024 cash burn. The company has also secured major contracts, such as the $2.7 billion Apache helicopter support deal with the U.S. Army and the $2.04 billion B-52 engine replacement task order. These contracts indicate Boeing's ability to compete in the defense sector despite recent challenges.

The CEO emphasized the importance of advancing the 737 Max and 777X development programs, which remain central to Boeing's future success. Ortberg also noted recent discussions with U.S. Transportation Secretary Sean Duffy to address certification delays.

How Did Markets React?

Despite Ortberg's tempered outlook, Boeing shares have benefited from improved investor sentiment. The stock's rise has been driven by expectations of higher free cash flow and production rate increases. Analysts at Bernstein SocGen raised Boeing's price target to $277 from $267, signaling continued confidence in the company's potential.

Market reactions also reflected broader trends in the aerospace and defense sector, which saw ETFs like the Invesco Aerospace & Defense ETF and the SPDR S&P Aerospace & Defense ETF rise after President Trump proposed a $1.5 trillion military budget for 2027. These ETFs have outperformed the broader market, indicating growing investor interest in the sector.

What Are Analysts Watching Next?

Analysts are closely watching Boeing's ability to meet production targets and manage its cash flow. The company must also address lingering issues in its commercial aviation division, particularly around the 737 Max and 787 programs.

UBS noted that continued build rate progress on the 737 Max and 787 aircraft could lead to stronger core cash performance. The firm also pointed to Boeing's balance sheet improvements and potential for steady free cash flow generation in the coming years.

Meanwhile, investors remain cautious. Matthew Akers of BNP Paribas warned against overly optimistic expectations for cash flow, suggesting a more measured outlook.

Boeing's recent performance is also being compared to broader industry trends, with UBS highlighting other top picks like Hexcel, GE Aerospace, and TransDigm. These firms are expected to benefit from a recovery in widebody production and improved margins.

Boeing's fourth-quarter earnings report in January will be a key moment for the company. Investors will look for signs of continued progress on production, cost management, and cash flow generation. If the company meets or exceeds expectations, it could further boost market confidence.

In the broader sector, the U.S. military budget proposal and geopolitical tensions are likely to influence defense spending and stock performance in the coming months. Analysts at William Blair noted that a $1.5 trillion defense budget may be more of a negotiation starting point than a certainty.

As Boeing moves through 2026, the company's success will depend on its ability to execute on its turnaround plan, manage production timelines, and maintain strong financial performance. Investors are watching closely for signs that Boeing is regaining its footing in the competitive aerospace and defense industry.