BA Boeing
Duopolist recovering from self-inflicted damage; the price assumes a full margin rebuild that execution must still deliver.
The story
Boeing is one half of the commercial jet duopoly, with a large defense and services business. That gives it a durable moat and a backlog of more than a decade. After years of quality failures, strikes and cash burn, it is in recovery: 737 and 787 production is ramping, and TTM revenue of 92B USD and a 5.7% operating margin show the rebuild has started. It is a mature franchise working its way back to normal economics while carrying about 43B USD of net debt.
The facts have improved since the last take: margin moved from negative to 5.7% and revenue is running 92B USD, so I raise y1 growth to 10% for the production ramp and target margin to 10%, closer to the duopoly's pre-MAX normal (8.5% was too punitive). Failure probability drops slightly because the cash crisis has eased. The horizon goes from 8 to 10 years because the backlog and duopoly structure support a longer recovery and reinvestment runway. My previous value of 30 USD against a 212 USD price was a greater-than-100% gap on a heavily covered name, which also pointed to overly harsh drivers. Sales-to-capital stays near the observed 1.55.
Value drivers
| Revenue growth (Y1) | 10.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 10y |
| Target operating margin | 10.0% |
| Years to target margin | 7 |
| Sales-to-capital | 1.50 |
| Beta | 1.25 |
| Failure probability | 4.0% |
| Cost of capital (WACC) | 10.5% |
| Terminal WACC | 9.6% |
Valuation bridge
| PV of explicit FCFF | 24.95B |
| PV of terminal value | 58.14B |
| Equity value | 38.54B |
| ÷ shares → per share | $48.76 |
News
bullish +0.30 · 8 articles
- Boeing vs. Lockheed Martin: Which Essential U.S. Aerospace Stock Is a Better Buy in 2026?
- Boeing (BA) Dips More Than Broader Market: What You Should Know
- Soaring Defense Spending Means Great News for These 2 Stocks
- Could Albany International (AIN)’s The Boeing (BA) Deal Strengthen its Aerospace Growth Story?
- Boeing’s Deliveries are at an 8-Year High. Is its Production Recovery Taking Hold?
- Archer Aviation Sends Strong Signal With Boeing Move
- Is GE Aerospace's Lead Already In Its Stock Price?
- These Dow Jones Stocks Buck Index's Dud Performance
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 101.40B | 10.0% | 6.3% | 5.45B | 6.15B | -699.82M | -633.61M |
| 2 | 110.75B | 9.2% | 6.9% | 6.52B | 6.23B | 290.08M | 237.79M |
| 3 | 120.11B | 8.4% | 7.5% | 7.70B | 6.24B | 1.47B | 1.09B |
| 4 | 129.31B | 7.7% | 8.2% | 8.96B | 6.14B | 2.83B | 1.90B |
| 5 | 138.22B | 6.9% | 8.8% | 10.30B | 5.94B | 4.36B | 2.65B |
| 6 | 146.67B | 6.1% | 9.4% | 11.69B | 5.63B | 6.06B | 3.34B |
| 7 | 154.49B | 5.3% | 10.0% | 13.12B | 5.21B | 7.91B | 3.94B |
| 8 | 161.53B | 4.6% | 10.0% | 13.72B | 4.69B | 9.03B | 4.08B |
| 9 | 167.63B | 3.8% | 10.0% | 14.24B | 4.07B | 10.17B | 4.16B |
| 10 | 172.66B | 3.0% | 10.0% | 14.66B | 3.35B | 11.31B | 4.19B |
Key risks
- FAA production caps or new quality or safety incidents stall the 737/787 ramp
- Fixed-price defense programs (KC-46, T-7, Starliner) keep producing charges
- The 43B USD net debt load limits flexibility if the recovery slips or there is a downturn in air travel
Catalysts
- FAA approval to raise 737 MAX production beyond 38 per month and certification of the 737-7/-10 and 777X
- Sustained positive free cash flow allowing deleveraging and a credit rating upgrade