The stock price of Boeing (BA.US) plummeted 26% from its high during the year, but Wall Street's bullish sentiment hit a four-year high! Delivery of the 737 MAX became the key to recovery

The Zhitong Finance App learned that although Boeing (BA.US) stock prices have continued to be under pressure since this year, Wall Street analysts are increasingly optimistic about the American aviation manufacturing giant's recovery prospects. According to the data, Boeing's stock price has fallen 26% from the high point at the end of January. Currently, it is less than half of the historical peak in 2019. The proportion of analysts recommending buying the stock has risen to the highest level since 2022, and no analysts currently follow the media have given a sales rating.

At the beginning of this year, Boeing's stock price showed strong performance for a while. Over the first three weeks of 2026, the stock rose 16% cumulatively, reflecting investors' growing confidence in CEO Kelly Ortberg's push for the company to reverse its predicament.

However, this optimism did not last long. Affected by macroeconomic shocks and the company's own operating problems, Boeing's stock price then fell sharply. The performance was not only inferior to its main competitor Airbus, but also lagged behind industrial manufacturing companies such as GE Aerospace (GE.US).

Despite this, Bank of America analyst Ronald Epstein said in a research report this week that the bank's optimism about Boeing has reached its highest level in a long time. Epstein believes that continuous negative news since this year has depressed Boeing's stock price, but has instead created attractive entry opportunities for investors. However, he also stressed that although the potential returns are impressive, investors still need to be wary of the company's risks in terms of information disclosure and market trust.

Many negative points have gradually subsided, Wall Street is optimistic about Boeing's recovery prospects

Since this year, Boeing has faced a series of operating issues that have continued to dampen investor confidence, including uncertainty about the rate at which production of the 737 MAX airliner will increase, possible strikes by engineers and other trade union members, and the discovery of software faults on the 737 MAX aircraft. However, as some issues have been solved one after another, analysts believe that the short-term risks faced by Boeing have declined.

A panel of experts from the US Federal Aviation Administration (FAA) determined last week that the software failure previously discovered on the 737 MAX airliner did not pose a safety risk. Meanwhile, Boeing union members have approved a new labor contract to avoid a strike that could affect production and operation.

Bank of America's Epstein pointed out that as regulators confirmed that the software issue did not involve security risks, and the threat of a strike was lifted, the risks faced by Boeing stocks have been significantly reduced. He said that despite significant fluctuations caused by recent events, according to the bank, the relevant uncertainty has basically subsided.

However, Boeing has yet to respond to the opinions of relevant analysts. The company said that since the third quarter financial report will be announced on October 27, it is currently in a quiet period before the results are released.

Valuations are still high and cash flow recovery is being tested

Despite the sharp drop in stock prices, Boeing's current valuation is still not low. According to the data, Boeing's current stock price is about 71 times the expected earnings for the next 12 months, making it the highest-valued constituent stock in the Dow Jones Industrial Average. This means that if the company encounters production delays, certification blocking, or other operating problems again in the future, the stock price may still face further downward pressure.

Meanwhile, Boeing's cash flow recovery remains the focus of market attention. Boeing was known for its strong cash flow performance, but it has recorded negative cash flow for five out of the past seven years, reflecting the company's continued financial pressure in recent years.

Analysts currently average that Boeing's free cash flow in 2026 is about US$2.27 billion, far below the US$13.6 billion level set in 2018.

Boeing Chief Financial Officer Jesus Malave Jr. also previously sent a cautious signal about the cash flow outlook. He said that since key models were delivered faster than expected, the possibility that the company's free cash flow this year would exceed the median of the previous forecast range of 1 billion to 3 billion US dollars has declined.

Furthermore, Boeing still needs to resolve the problems of certification and delivery delays for many new models. Among them, the much-publicized 777X wide-body airliner may need to continue additional testing in 2027 to further extend the development and certification cycle of this model. However, the regulatory certification process for some new models in the 737 MAX series is also slower than previously anticipated, making it difficult for Boeing to convert related orders into revenue and cash flow as soon as possible.

Bloomberg industry research analyst George Ferguson pointed out that Boeing's current investment logic is essentially an operational recovery, and the delivery performance of the 737 airliner will be the key to determining whether the recovery will be successful.

The 737 MAX is still the core of recovery, and the impact of historical security issues still exists

The 737 series has long been Boeing's most important commercial aircraft product, and is also one of the main models widely used by airlines around the world. However, the latest generation 737 MAX series has continued to be plagued by safety, quality control, and regulatory issues over the years.

In 2018 and 2019, the 737 MAX airliner operated by Lion Air Indonesia and Ethiopian Airlines successively experienced fatal air crashes. The related accidents were blamed on defective automatic flight control software, which caused the 737 MAX fleet to be grounded for a long period of time from 2019 to 2020.

In January 2024, an Alaska Airlines 737 MAX 9 passenger plane had a door stopper falling off during the flight, which once again triggered a review by regulators of Boeing's production quality and safety management system.

These issues all occurred before Ortberg became CEO of Boeing in August 2024, but their subsequent effects continued to hamper the company's production recovery.

Currently, Boeing is working hard to push two new models of the 737 MAX series into the market that have been delayed for a long time. Among them, the 737 MAX 7 has recently obtained regulatory certification, while the 737 MAX 10 is still awaiting regulatory approval.

Analysts believe that as some technical and regulatory barriers are gradually lifted, whether Boeing can steadily increase 737 MAX production and improve the pace of delivery in the future will directly affect the company's revenue growth, cash flow recovery, and debt reduction progress.

The recovery in demand in the aviation industry provides support and ushers in new opportunities for the defense business

Despite Boeing's own challenges, the long-term demand outlook for the global aviation industry still provides it with important support. As one of the two major players in the global large-scale commercial aircraft manufacturing market, Boeing is expected to benefit from the aircraft procurement demand brought about by airlines renewing their fleets and expanding capacity in the next few years.

Matthew Akers, an analyst at BNP Paribas, said that the aviation manufacturing industry is emerging from the longest and deepest downturn in the industry's history. This means that if Boeing can resume stable production and increase delivery capacity, the company is expected to reap significant benefits from the increase in global demand for commercial aircraft.

At the same time, there have also been positive developments in Boeing's defense business. In March of this year, Boeing defeated Lockheed Martin (LMT.US) to win the US Air Force F-47 next-generation fighter project. Furthermore, Boeing also recently defeated Northrop Grumman (NOC.US) and obtained a contract for the US Navy's next-generation carrier-based fighter F/A-XX project. The project aims to develop a new model to replace the F/A-18 series fighter in the future. Currently, the specific technical details are still confidential.

However, the defense business still faces policy uncertainty. It is still difficult for investors to determine how the US government's 2027 defense budget will ultimately be determined. This may affect future funding arrangements and order prospects for military projects.

In addition to the company's own operating problems, Boeing is also affected by the deterioration of the macroeconomic environment. The war in Iran has kept international oil prices high and increased inflationary pressure, while US Treasury yields have risen markedly since this year, which has also increased the financing and operating costs of aerospace and defense companies.

Jefferies analyst Sheila Kahyaoglu pointed out that oil prices continue to be above $100 per barrel, which is not conducive to new aircraft orders for airlines and may also weaken revenue growth in the aircraft after-sales service business. In this context, traditional industrial enterprises that lack growth momentum related to AI data center construction are facing a more severe market environment.

Despite recent weakness in Boeing's stock price, analysts generally believe that its long-term investment value still depends on whether commercial aircraft production and delivery capacity can be restored, rather than changes in short-term market sentiment.

Ivan Feinseth, chief investment officer of Tigress Financial, said that Boeing must continue to make progress in three key areas: certification of new models, production quality control, and cash flow improvement. He stressed that only by showing steady and continuous improvement in all three areas can Boeing truly prove the success of its business recovery.

For investors, the third quarter financial report to be announced on October 27 will be an important window for testing Boeing's production recovery progress, cash flow performance, and management's future prospects.