Boeing's MAX Turnaround: How Production Gains Could Ignite a Stock Surge

The aviation industry is no stranger to volatility, but few companies have faced the same level of scrutiny as Boeing in recent years. After years of setbacks—from the 737 MAX grounding to supply chain bottlenecks—the company now stands at a critical inflection point. Stabilizing production at the Federal Aviation Administration (FAA)-mandated 38 aircraft per month could not only curb cash burn but also unlock a path to higher output, deferred deliveries, and a valuation rebound. For investors, the question is clear: Is Boeing’s recovery story finally ready to take flight?

The Stabilization Imperative: Cash Flow and Inventory Relief

Boeing’s journey toward production stability is a foundational step toward financial recovery. After a mid-air panel blowout in January 2024 led to the FAA capping MAX production at 38/month, Boeing has spent the past year working to meet this rate consistently. While April 2025 production dipped to 31 units due to lingering supply chain issues, management’s focus on stabilizing at 38/month by mid-2025—coupled with FAA approval requirements—is a critical milestone.

Achieving this rate would reduce cash burn by lowering inventory costs and avoiding penalties from delayed deliveries. With 97 undelivered MAX aircraft in storage as of April 2025, stabilizing output also prevents further overproduction. More importantly, it positions Boeing to pursue the next phase: seeking FAA approval to raise production to 52/month, a target CEO Kelly Ortberg has called a long-term goal.

The Catalyst: Unlocking 52/ Month and Deferred Deliveries

The 52/month target is not just a production benchmark—it’s a financial catalyst. At current pricing ($130 million per MAX), a 52/month rate would generate an additional $1.2 billion in annual revenue versus the 38/month cap. But the FAA will not approve an increase until Boeing demonstrates sustained quality improvements.

Recent progress is encouraging. Boeing has implemented machine learning tools to monitor supply chain defects and rolled out new employee training programs. While analysts at Forecast International remain skeptical, the company’s April 2025 focus on resolving fastener shortages and reassigning China-bound inventory suggests a turning tide.

Meanwhile, the resumption of deliveries to China in May 2025—after Beijing lifted its ban in response to U.S. tariff reductions—adds urgency. With 25 of 30 China-bound MAXs now slated for delivery, Boeing can clear inventory, reduce storage costs, and free up cash. This also alleviates a key risk: the 737 MAX backlog of 828 orders provides a multiyear runway for revenue growth if production scales.

Supply Chain Resilience and Tariff Risks

The path to 52/month is not without hurdles. Supply chain disruptions—exacerbated by U.S.-China trade tensions—continue to plague Boeing. Tariffs on Chinese materials remain at 30%, down from 145% but still costly. However, the tariff truce with China, which lowered U.S. levies on Chinese goods to 30%, may ease input costs.

Boeing’s response to these challenges is critical. Its investment in advanced analytics to predict supply chain bottlenecks and partnerships with Tier 1 suppliers to localize production in key markets could mitigate risks. Competitor Airbus’s dominance in narrowbody aircraft remains a threat, but Boeing’s pricing power in the MAX backlog—particularly for the high-margin MAX 10—offers a competitive edge.

Valuation: Undervalued Amid Recovery

Boeing’s stock trades at just 7.8x forward EV/EBITDA, well below its five-year average of 11x. The market has yet to price in the full potential of a 52/month ramp-up and deferred delivery resolution. A conservative estimate assumes 45/month production by late 2025, translating to $6.3 billion in incremental annual revenue. Even at 38/month, Boeing’s cash flow could turn positive by 2026, supported by backlog drawdowns.

Conclusion: A Buy on the Turnaround

Boeing’s recovery hinges on production stability and FAA confidence. While risks like tariff volatility and supply chain delays linger, the catalysts—deferred deliveries resuming, inventory clearance, and the path to 52/month—are now in motion. For investors, Boeing’s undervalued multiples and backlog-driven revenue stream make it a compelling contrarian play. The skies may still be cloudy, but the horizon is clearing for Boeing—and its shareholders.