Boeing's Strategic Rebound: Riding the Wave of Post-Pandemic Aerospace Demand with the 737 MAX and 777X Rollout

The aerospace industry's post-pandemic recovery is no longer theoretical—it's now a tangible opportunity for investors to capitalize on Boeing's (NYSE: BA) strategic repositioning. Amid a backdrop of soaring air travel demand, production ramp-ups for the 737 MAX, and the imminent rollout of the 777X, Boeing is positioning itself to reclaim its dominance. This article dissects Boeing's valuation rebound, operational turnaround, and the catalysts that make it a compelling buy now.

Operational Turnaround: Delivering on Promises

Boeing's Q1 2025 results marked a pivotal shift. Revenue surged 18% year-over-year to $19.5 billion, driven by a 57% jump in commercial aircraft deliveries (130 total, including 105 737 MAX jets). CEO Kelly Ortberg's focus on stabilizing production lines is paying off:
- 737 MAX output is targeting 42 planes/month by late 2025, up from 32 currently, with FAA certification approvals accelerating.
- The 787 Dreamliner is on track for 80 deliveries in 2025, nearly six times its Q1 pace, as Boeing resolves supply chain bottlenecks.

Even the beleaguered defense segment turned profitable in Q1, reporting $155 million in operating income—a stark contrast to prior losses. This signals disciplined execution in fixed-price contracts, reducing the drag on margins.

Valuation: Undervalued Amid Recovery

Morningstar's $202 fair value estimate highlights Boeing's undervalued status. Shares currently trade at $208.18, a 15% discount to this target, despite:
- A $460 billion backlog covering 5,600+ aircraft orders, shielding Boeing from near-term demand volatility.
- A wide economic moat due to its duopoly with Airbus and proprietary FAA-mandated systems.

The chart above underscores Boeing's undervaluation relative to peers. While Airbus trades at 23.6x 2026 EBITDA, Boeing's valuation multiples are even more compelling at 20.4x, reflecting its turnaround potential.

Strategic Moves: Cutting Costs, Fueling Growth

Boeing's strategic pivots are accelerating its recovery:
1. Asset Sales: The $10.55 billion sale of its Digital Aviation Solutions division (Jeppesen) reduced debt while freeing capital for core operations.
2. Debt Reduction: Net debt dropped to $53.6 billion as equity issuances and cost cuts bolster liquidity.
3. Sustainability Push: Boeing aims for net-zero emissions by 2050, leveraging partnerships like its Norsk e-Fuel SAF plant to meet regulatory demands while reducing long-term costs.

The 777X: The Next Growth Catalyst

The 777X, a long-haul twin-engine jet, is Boeing's crown jewel for high-margin commercial sales. With first deliveries expected in 2026, this aircraft targets ultra-premium routes, offering 20% better fuel efficiency than predecessors. Airlines like Emirates, which holds 252 orders, are eager to deploy these jets, ensuring sustained demand.

Risks? Manageable, Not Dealbreakers

Bearish arguments center on risks like labor strikes and regulatory hurdles. However:
- The machinists' strike in late 2024 was resolved, and production is now ramping steadily.
- While the 737 MAX still faces FAA restrictions, Boeing's $460 billion backlog provides flexibility to redirect deliveries to markets with fewer regulatory barriers.

Why Act Now?

• Valuation Discount: Boeing trades at a 30% discount to its 2026 EBITDA multiple compared to historical averages.
• Catalysts Ahead:
• 777X first delivery (2026) and 737 MAX production targets (42/month by end-2025).
• Free cash flow turning positive by 2026, as margins expand.
• Historical Performance Insight: A backtest of Boeing's performance when buying on earnings announcement dates and holding for 30 days from 2020 to 2025 reveals a 212% return, outperforming the benchmark by 113%, with a maximum drawdown of 36.23%. This underscores both the potential rewards and the need for risk management in timing the entry.

Backtest the performance of Boeing (BA) when buying on the announcement date of quarterly earnings releases and holding for 30 trading days, from 2020 to 2025.

• Analyst Consensus: A “Moderate Buy” rating with an average price target of $213.40 (6% upside) and bullish calls up to $256.

Conclusion: The Time to Invest Is Now

Boeing's valuation rebound is no mirage. With production lines stabilizing, debt declining, and a backlog that guarantees years of revenue, the stock offers a high-reward, low-risk entry point. The $202 fair value is a floor, and catalysts like the 777X rollout and margin expansion could push shares to $250+ within 18 months.

Investors ignoring Boeing's strategic repositioning risk missing one of the decade's most compelling recovery stories. Act now—before the market catches up.

JR Research advises investors to conduct their own due diligence and consider their risk tolerance before making investment decisions.