Boeing's Production Ramp-Up: A Turning Point for Cash Flow and Stock Valuation?

Boeing (BA) stands at a critical juncture. The aerospace giant's ability to ramp up production of its flagship 737 MAX series—while navigating regulatory hurdles, supply chain constraints, and geopolitical risks—will determine its path to cash flow recovery and a revaluation of its stock. For investors, the question is clear: Can Boeing deliver on its production targets, unlock its massive backlog, and capitalize on pent-up demand? Let's dissect the data to uncover the opportunities and risks.

Production Feasibility: Hitting 38/ Month—A Fragile Milestone

Boeing's current production target of 38 737 MAX aircraft per month—imposed by the FAA after a January 2024 door plug incident—is already a stretch. In April 2025, Boeing produced just 31 units, below even this capped rate, due to bottlenecks in wing assembly and a “Jobs Behind Schedule (JBS)” backlog. shows how production volatility has mirrored its stock's underperformance.

The challenges are structural:
- Supply Chain Delays: Fastener shortages and logistical hurdles have forced production stops.
- Quality Control Scrutiny: The FAA's ongoing audits require Boeing to demonstrate “sustained improvements” before lifting the cap.
- Cultural Shifts: A 220% rise in safety-related whistleblower reports signals progress but also underscores systemic risks.

However, Boeing's CEO, Kelly Ortberg, insists that stabilizing at 38/month is achievable by Q3 2025. If realized, this would unlock incremental cash flow by reducing inventory backlogs (97 undelivered MAX units as of April 2025) and accelerating deliveries. The path to higher rates (e.g., 47/month by late 2025) depends on resolving JBS and securing FAA approval—a high bar but not insurmountable.

Delivery Recovery in China: A Catalyst for Backlog Conversion

A critical wildcard is China's resumption of MAX deliveries. U.S.-China trade tensions led to a suspension of deliveries to Chinese carriers, forcing Boeing to reroute 30 MAX 8s to new customers like Air India Express. This reconfiguration process—costly and time-consuming—has delayed revenue recognition.

reveals that 300+ MAX orders from Chinese carriers remain unfulfilled. A thaw in trade relations could allow Boeing to begin converting this backlog into cash. For context, a single MAX delivery generates ~$100 million in revenue. A resumption of deliveries by mid-2025—announced by Boeing—would add ~$3 billion annually to revenue, assuming 30/month deliveries to China.

Certification Delays: The MAX 7 and 10—A Gold Mine Awaits

The delayed certification of the MAX 7 and MAX 10 variants (targeted for late 2025) poses both a risk and an opportunity. These models account for 1,532 orders (1,200 MAX 10, 332 MAX 7), representing ~30% of Boeing's total MAX backlog. Their delayed certification has left 30 aircraft in inventory, awaiting FAA approval.

The stakes are high:
- MAX 10: A direct competitor to Airbus's A321neo, with a larger capacity.
- MAX 7: Fills a niche for short-haul routes, popular with airlines like Alaska and United.

If certification is delayed beyond 2025, Boeing risks losing orders to Airbus. However, if approvals come through by year-end, these variants could generate ~$15 billion in revenue annually by 2026. The FAA's insistence on resolving engine de-icing issues is the final hurdle—achievable but time-sensitive.

The Investment Case: Undervalued, But Risky

Boeing's stock trades at a P/E ratio of 12x, far below its historical average of 20x, despite a backlog of 4,742 MAX orders and ~$130 billion in deferred revenue. The disconnect stems from execution risks, but the upside is compelling:

1. Cash Flow Turnaround: Stabilizing production at 38/month could reduce inventory costs and free up capital.
2. Backlog Conversion: Delivering 400+ MAX aircraft in 2025 (vs. 2024's 314 deliveries) would lift revenue by ~20%.
3. Valuation Re-rating: A successful ramp-up could push Boeing's P/E to 15x-18x, adding $20-30 to its stock price.

Risks to Consider

• FAA Overreach: The agency could extend the 38/month cap indefinitely or impose new restrictions.
• Supply Chain Logjams: Fastener shortages and wing assembly delays could persist.
• Trade Tensions: China may delay resuming deliveries, prolonging reconfiguration costs.

Conclusion: Buy the Dip Before the Turnaround

Boeing's stock is pricing in worst-case scenarios, but the path to recovery is clear. Investors who bet on Boeing now—around $140/share—could capitalize on a potential rebound if production stabilizes, China deliveries resume, and MAX variants gain certification. The risks are real, but the rewards—a 50%+ upside by late 2025—are asymmetric.

Actionable Takeaway: Accumulate Boeing shares on dips below $140, with a tight stop-loss at $130. The next catalyst? Positive updates on JBS resolution and MAX 7/10 certification by mid-2025.

Time is ticking—Boeing's comeback could be the defining aerospace story of 2025. Don't miss it.