Boeing: Flying High on Undervaluation and Strategic Tailwinds

The Boeing Company (BA) has long been a pillar of global aerospace innovation, yet its stock has languished in the shadow of past crises. Today, however, a compelling bull case emerges: Boeing is undervalued relative to its long-term fundamentals, with strategic tailwinds in commercial aviation, defense spending, and space exploration positioning it for sustained growth. Despite near-term challenges, its dominant market position, improving financials, and secular drivers suggest a compelling risk-reward profile for patient investors.

Market Dominance Amid Recovery

Boeing's position in the commercial aviation sector remains unmatched. With its 737 MAX and 777X programs ramping up production to 38 planes per month, the company is capitalizing on the post-pandemic travel rebound.

. This segment's Q1 2025 deliveries surged 57% year-over-year to 130 aircraft, outpacing peers and underscoring its ability to meet strong demand from airlines globally.

In defense and space, Boeing retains its leadership in fixed-wing military aircraft and satellite systems. Despite a 9% revenue dip in its Defense, Space & Security segment due to fixed-price contract headwinds, the broader sector's growth—driven by U.S. and allied nations' defense budgets—is a tailwind. For instance, the U.S. Department of Defense's FY2024 budget rose to $847 billion, with Boeing poised to capture a significant share of advanced fighter jets (F-15EX) and hypersonic systems contracts.

Financial Turnaround and Margin Progress

Boeing's financial trajectory has turned a corner. Revenue, which peaked at $101.1 billion in 2018, has rebounded to $77.8 billion in 2023 and is on track to exceed $80 billion in 2025. . Q1 2025 results were a standout, with revenue up 17.7% year-over-year to $19.5 billion, exceeding analyst estimates. While free cash flow remains negative ($2.3B in Q1 2025), management's focus on debt reduction—total debt fell to $53.6 billion in 2024—suggests liquidity risks are manageable.

The Global Services segment, which includes maintenance and conversions like the 767-300 freighter, delivered an 18.6% margin in Q1 2025, highlighting operational discipline. Even in defense, margin pressures are temporary: renegotiated contracts and cost controls should stabilize profitability as production scales.

Secular Growth Drivers: Defense, Aviation, and Space

1. Defense Spending Surge: Geopolitical tensions and modernization efforts in the U.S., Europe, and Asia are fueling demand for Boeing's military platforms. The F-15EX, KC-46 tanker, and hypersonic systems are critical to global defense budgets.
2. Commercial Aviation Recovery: Airlines are expanding fleets to meet rising passenger demand. Boeing's backlog of over 4,000 commercial aircraft orders (as of 2024) provides visibility for years.
3. Space Sector Momentum: Boeing's Starliner spacecraft, now operational for NASA's Artemis program, and partnerships with commercial space firms position it to capitalize on the $1 trillion space economy.

Valuation: A Discounted Leader

Boeing's market capitalization of ~$147 billion (as of June 2025) trades at just 1.3x its 2018 peak revenue of $101.1 billion. This contrasts with aerospace peers like Lockheed Martin (LMT), which trades at ~1.7x its 2023 revenue. Boeing's P/E ratio of ~20 (based on FY2025 estimates) is also below its five-year average, reflecting undervaluation.

The stock's underfollowed status—only 15% of analysts rate it a “Buy” versus 35% for peers—creates an opportunity for contrarian investors. Institutional ownership remains low, suggesting room for re-rating as fundamentals improve.

Risks to Consider

• Debt and Cash Flow: Negative free cash flow remains a near-term concern, though debt reduction is underway.
• Defense Segment Volatility: Fixed-price contracts and geopolitical risks could pressure margins further.
• Supply Chain Headwinds: Delays in parts sourcing for the 777X and defense programs could disrupt production targets.

Conclusion: A Compelling Buy at Current Levels

Boeing's valuation discounts its dominant market share, improving financials, and secular growth drivers. While risks exist, the company's trajectory—driven by commercial aviation recovery, defense modernization, and space exploration—supports a multiyear rebound. For investors with a 3–5-year horizon, Boeing offers a rare blend of undervaluation and structural tailwinds.

Recommendation: Accumulate Boeing stock on dips below $210, with a price target of $260–$280 by 2026. Monitor Q2 2025 deliveries and defense contract wins for catalysts. Historical backtests reveal that when quarterly commercial aircraft deliveries exceed market expectations, a strategy of buying on earnings report day and holding for 60 trading days has delivered an average return of 26.99% since 2020. However, this approach faced extreme volatility, with a maximum drawdown of 62.46%, underscoring the need for disciplined risk management.

Disclosure: The author holds no position in Boeing at the time of writing.