Boeing's Stock: A Turnaround Tale of Cash Flow and Production Momentum

Boeing's Q1 2025 results underscore a pivotal shift toward stabilization, with its financial health and production capabilities aligning to create a compelling investment narrative. For long-term investors, the company's improved cash flow trajectory, ambitious production ramp-up targets, and a robust order backlog position it as a potential beneficiary of multiple expansion. Here's why Boeing's stock could be primed for a comeback.

Cash Flow Recovery: The Foundation of Renewed Confidence

Boeing's free cash flow (FCF) improved dramatically in Q1 2025, narrowing its outflow to $2.29 billion from $3.93 billion in the prior year. This progress, driven by higher aircraft deliveries and cost discipline, signals a path toward positive FCF by year-end—a critical milestone for investors. The company's sale of its Digital Aviation Solutions business for $10.55 billion further bolstered liquidity, reducing debt and alleviating pressure on its balance sheet.

While Boeing's stock trades at a 12x forward P/E ratio, significantly below peers like Lockheed Martin (20x) and Raytheon (18x), the gap could narrow if FCF turns positive. Analysts estimate Boeing's FCF could reach $1.5–2.0 billion by 2026, assuming production targets are met. This improvement, combined with a backlog of $460 billion in commercial orders, creates a runway for sustained revenue growth.

Production Momentum: Scaling to Meet Demand

Boeing's delivery of 130 commercial aircraft in Q1—a 57% year-over-year jump—reflects progress in stabilizing its production lines. Key targets include:
- 737 MAX: Increasing production to 38 per month by late 2025, up from 31 currently, with plans to push further to 42/month.
- 787 Dreamliner: Raising output from 5 to 7 per month by year-end.
- 777X: Awaiting FAA certification for the 777-9, expected to debut in 2026.

The ramp-up is underpinned by reduced defects (down 30% since 2024) and a partnership with the FAA to meet KPIs (e.g., stricter inspections). If Boeing achieves these goals, it could sustain deliveries through 2028, leveraging its backlog of over 5,600 aircraft.

Backlog and Order Strength: A Multiyear Revenue Buffer

Boeing's order momentum remains strong, with 221 net commercial orders in Q1—including 20 each of the 777-9 and 787-10—highlighting demand for its widebody jets. The $460 billion commercial backlog, paired with defense contracts (e.g., the $40 billion U.S. Air Force F-47 fighter jet program), ensures multiyear visibility. This stability contrasts with peers facing geopolitical headwinds, positioning Boeing as a safer bet for industrial investors.

Challenges and Risks

Despite the positives, risks persist:
1. Supply Chain Volatility: Labor cost hikes (e.g., 15% wage increases for machinists) and lingering disruptions from a 2024 supplier fire threaten margins.
2. Tariffs and Trade: U.S.-China tensions could delay deliveries to Asian markets, though Boeing is lobbying for tariff relief.
3. FAA Approval Delays: Missing KPI milestones could stall production increases, impacting FCF timelines.

Investment Thesis: A Case for Multiple Expansion

Boeing's stock trades at a 25% discount to its historical average P/E ratio, reflecting lingering skepticism about its operational turnaround. However, if it achieves:
- Positive FCF by end-2025,
- 38/month MAX production stability by Q2 2025, and
- Certification of MAX 7/10 variants by year-end,

the valuation gap could narrow. Analysts project Boeing's earnings could hit $6.00–7.00 per share by 2026, implying a 15–18x forward multiple (closer to Lockheed's valuation). At $169.45, Boeing's stock could rise to $240–270 if multiples expand, making it a compelling long-term play.

Conclusion: A Stock to Watch for Patient Investors

Boeing's combination of cash flow improvement, production scalability, and a fortress-like backlog positions it as a turnaround candidate. While risks remain, the company's progress in stabilizing operations and its undervalued multiple suggest upside potential. Investors with a 2–3-year horizon may consider accumulating shares, particularly if FCF turns positive in late 2025. For now, Boeing's story is one of resilience—and the stock could soon reflect its renaissance.