Boeing's Turnaround: Can Strong Cash Flows Lift Its Valuation?

Boeing (BA) has spent years battling crises: the 737 MAX groundings, union strikes, supply chain bottlenecks, and a $14.3 billion free cash flow (FCF) deficit in 2024. Yet today, the company stands at a pivotal juncture. Analysts at Redburn believe Boeing could achieve positive FCF by year-end 深知2025 and surpass its 2018 peak of $13.6 billion with FCF exceeding $14 billion by the end of the decade. If realized, this would mark a transformative shift for a stock trading at just 4.7x its 2025 FCF estimate—far below peers like Lockheed Martin (LMT) and Raytheon (RTX).

The Operational Turnaround: Production as the Engine

Boeing's recovery hinges on its ability to ramp up production of its two most critical models: the 737 MAX and 787 Dreamliner. Under CEO Kelly Ortberg, the company has set ambitious targets: producing 63 737 MAXs and 14 787s per month by 2026. These rates, if achieved, would add $1.7 billion in post-tax cash profits annually compared to current forecasts. The progress is already visible: Boeing's cash burn narrowed to $2.3 billion in Q1 2025, down from $4 billion a year earlier, as deliveries rose 12% to 85 aircraft.

Ortberg's leadership has also prioritized cultural and strategic reforms. The company has slashed costs by $3 billion through restructuring, sold non-core assets (e.g., its Digital Aviation Solutions division for $10.5 billion), and streamlined decision-making to accelerate production. This discipline is critical, as Boeing's 2024 losses of $11.9 billion—driven by $7.9 billion in commercial aircraft losses—highlighted the consequences of past missteps.

The Cash Flow Pivot: From Survival to Growth

The stakes are high. Redburn's $14 billion FCF forecast for the end of the decade assumes Boeing can sustain its production ramp-up, reduce defects (which caused a 777X flight test halt in 2024), and improve margins. The path starts with turning FCF positive in 2025, a milestone that would signal operational stability.

Boeing's share price has been a lagging indicator of this progress, down 30% since mid-2023. But if FCF improves as projected, the stock could see a valuation re-rating. At $275—a Redburn price target—Boeing would trade at 19x its $14 billion FCF estimate, in line with its 2018 multiple. Even a more conservative $10 billion FCF by 2026 would imply a 40% upside from current levels.

Risks and the Reward-to-Risk Balance

The risks are well-known. Supply chain disruptions—exacerbated by wage hikes for machinists and lingering supplier bottlenecks—could delay production targets. FAA certification delays for the 777X (now expected in 2026) and geopolitical tensions (e.g., China's trade policies) also loom.

Yet the reward outweighs the risks. Boeing's order backlog of 4,400 aircraft represents $360 billion in future revenue, and its dominance in narrowbody jets remains unchallenged. Even if FCF reaches just $8 billion by 2026—half Redburn's bullish case—the stock's current valuation of 5.8x that figure is compelling.

Investment Thesis: Buy with a Long View

Boeing's shares are priced for failure. Investors who bet on execution—on Ortberg's ability to deliver on production, quality, and cost discipline—could be handsomely rewarded. The stock's dividend yield of 1.4% offers some downside protection, while its improving balance sheet (debt reduced by $12 billion in 2024) adds resilience.

At its current valuation, Boeing offers a rare combination: a 30% discount to peers and the potential for multiple expansion. The risks are real, but the path to $14 billion FCF is clear. For investors with a 3–5 year horizon, Boeing represents an asymmetric opportunity: limited downside in a worst-case scenario, and substantial upside if the turnaround gains traction.

Recommendation: Buy Boeing with a price target of $275, contingent on meeting production targets and FCF milestones. Monitor FCF progress quarterly and stay wary of supply chain or regulatory setbacks.