According to Zhitong Finance APP, despite Boeing's (BA.US) stock continuing to face pressure this year, Wall Street analysts have become increasingly optimistic about the U.S. aerospace manufacturer's recovery prospects. Data shows that Boeing's stock has declined 26% from its late-January high and is now less than half of its 2019 historical peak. The proportion of analysts recommending a "buy" rating has risen to the highest level since 2022, and currently, not a single analyst tracked by the media has issued a "sell" rating.
At the beginning of this year, Boeing's stock performed strongly. In the first three weeks of 2026, the stock rose by 16%, reflecting growing investor confidence in CEO Kelly Ortberg's efforts to turn the company around.
However, this optimism did not last long. Affected by macroeconomic pressures and the company’s own operational issues, Boeing’s stock price subsequently declined sharply, underperforming not only its main competitor Airbus but also industrial manufacturers such as GE Aerospace (GE.US).
Nevertheless, Bank of America analyst Ronald Epstein stated in a research report this week that the bank’s optimism toward Boeing has reached its highest level in a long time. Epstein believes that a series of negative developments this year have depressed Boeing’s stock price, creating an attractive entry opportunity for investors. However, he also emphasized that, despite the potential for strong returns, investors should remain cautious of risks related to the company’s disclosure practices and market trust.
Multiple negative factors are gradually fading; Wall Street sees a promising recovery outlook for Boeing.
This year, a series of operational challenges faced by Boeing have continued to undermine investor confidence, including uncertainties around the rate of production increases for the 737 MAX, potential strikes by engineers and other union members, and the discovery of software faults in the 737 MAX model. However, as some of these issues have been gradually resolved, analysts believe Boeing’s short-term risks have decreased.
A panel of experts from the U.S. Federal Aviation Administration (FAA) determined last week that previously identified software issues with the 737 MAX do not pose a safety risk. Meanwhile, Boeing union members have approved a new labor contract, averting a strike that could have disrupted production operations.
Epstein of Bank of America noted that the risks facing Boeing’s stock have significantly decreased, as regulators have confirmed that the software issue does not involve security risks and the threat of strikes has been lifted. He stated that, despite recent events causing considerable volatility, the bank believes the associated uncertainties have largely subsided.
However, Boeing has not yet responded to the analysts' views. The company stated that it is currently in a quiet period ahead of its third-quarter earnings report, scheduled for October 27.
Valuations remain high, and cash flow recovery faces challenges.
Despite the significant drop in its stock price, Boeing's current valuation remains high. Data shows that Boeing's current stock price is approximately 71 times its expected earnings over the next 12 months, making it the most highly valued stock in the Dow Jones Industrial Average. This means that if the company faces further production delays, certification hurdles, or other operational issues, its stock price could still face additional downward pressure.
Meanwhile, the recovery of Boeing's cash flow remains a key focus for the market. Boeing was once known for its strong cash flow, but it recorded negative cash flow in five of the past seven years, reflecting ongoing financial pressures the company has faced in recent years.
Analysts currently expect Boeing's free cash flow in 2026 to be approximately $2.27 billion, significantly lower than the $13.6 billion peak reached in 2018.
Boeing's Chief Financial Officer, Jesus Malave Jr., previously signaled caution regarding cash flow prospects, stating that the likelihood of the company achieving free cash flow above the midpoint of its previously forecast range of $1 billion to $3 billion has decreased due to slower-than-expected deliveries of key aircraft models.
In addition, Boeing still needs to address delays in the certification and delivery of several new aircraft models. Notably, the highly anticipated 777X wide-body aircraft may require additional testing into 2027, further extending its development and certification timeline. Meanwhile, regulatory certification progress for certain new variants of the 737 MAX series has lagged behind previous expectations, making it difficult for Boeing to quickly convert related orders into revenue and cash flow.
Bloomberg Intelligence analyst George Ferguson noted that the current investment thesis for Boeing is essentially a operational turnaround, and the delivery performance of the 737 aircraft will be critical to determining whether the recovery succeeds.
The 737 MAX remains central to the recovery; historical safety concerns still persist.
The 737 series has long been Boeing’s most important commercial aircraft product and one of the most widely used mainstay models among airlines worldwide. However, the latest generation, the 737 MAX, has faced ongoing challenges related to safety, quality control, and regulatory issues over the past several years.
In 2018 and 2019, fatal crashes occurred involving 737 MAX aircraft operated by Indonesia's Lion Air and Ethiopia's Ethiopian Airlines; the accidents were attributed to a flawed automated flight control system, resulting in the prolonged grounding of the 737 MAX fleet from 2019 to 2020.
In January 2024, an Alaska Airlines Boeing 737 MAX 9 experienced a door plug detachment during flight, prompting renewed scrutiny from regulators into Boeing’s production quality and safety management systems.
These issues all occurred before Ortberg became Boeing’s CEO in August 2024, but their ongoing effects continue to hinder the company’s production recovery.
Currently, Boeing is working to bring two long-delayed new models of the 737 MAX series to market. The 737 MAX 7 has recently received regulatory certification, while the 737 MAX 10 is still awaiting approval from regulators.
Analysts believe that Boeing’s ability to steadily increase 737 MAX production and improve delivery cadence, as certain technical and regulatory barriers are gradually lifted, will directly impact the company’s revenue growth, cash flow recovery, and debt reduction progress.
Recovery in aviation demand provides support, while defense business opens up new opportunities.
Despite Boeing's own challenges, the long-term demand outlook for the global aviation industry continues to provide strong support. As one of the two dominant players in the global market for large commercial aircraft, Boeing is well positioned to benefit from aircraft procurement demands driven by airlines' efforts to modernize their fleets and expand capacity over the coming years.
Bank of Paris analyst Matthew Akers said the aerospace manufacturing industry is emerging from its longest and deepest downturn in history. This means that if Boeing can restore stable production and increase delivery capacity, the company stands to benefit significantly from global demand growth for commercial aircraft.
Meanwhile, Boeing’s defense business has also made positive progress. In March this year, Boeing outcompeted Lockheed Martin (LMT.US) to win the U.S. Air Force’s F-47 Next Generation Air Dominance fighter program. Additionally, Boeing recently defeated Northrop Grumman (NOC.US) to secure the contract for the U.S. Navy’s next-generation carrier-based fighter, the F/A-XX. This project aims to develop a new aircraft to replace the F/A-18 series, though specific technical details remain classified.
However, the defense sector still faces policy uncertainty. Investors find it difficult to determine how the U.S. government’s fiscal year 2027 defense budget will ultimately be finalized, which could impact funding arrangements and order prospects for future defense projects.
In addition to its own operational issues, Boeing has been affected by a worsening macroeconomic environment. The Iran conflict has kept international oil prices elevated, intensifying inflationary pressures, while U.S. Treasury yields have risen significantly this year, increasing financing and operational costs for aerospace and defense companies.
Jefferies analyst Sheila Kahyaoglu noted that sustained oil prices above $100 per barrel are unfavorable for airlines placing new aircraft orders and may also dampen revenue growth in aircraft after-sales services. Against this backdrop, traditional industrial companies lacking growth drivers related to AI data center construction are facing an even more challenging market environment.
Despite Boeing's recent stock weakness, analysts generally believe its long-term investment value depends on its ability to restore commercial aircraft production and delivery capabilities, rather than short-term market sentiment.
Ivan Feinseth, Chief Investment Officer at Tigress Financial, stated that Boeing must make sustained progress in three key areas: certification of new aircraft models, production quality control, and cash flow improvement. He emphasized that only by demonstrating stable and consistent improvement in all three areas can Boeing truly prove the success of its operational recovery.
For investors, the upcoming third-quarter earnings report on October 27 will serve as a crucial window to assess Boeing’s progress in production recovery, cash flow performance, and management’s future outlook.