After Earnings, Is Boeing Stock a Buy, a Sell, or Fairly Valued?

Boeing BA reported its first-quarter earnings on April 23. Here’s Morningstar’s take on Boeing’s earnings and stock.

Key Morningstar Metrics for Boeing

• Fair Value Estimate: $202.00
• Morningstar Rating: ★★★
• Economic Moat: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Boeing’s Earnings

Boeing delivered 104 737 MAX and 13 787 jets in the first quarter, a solid start toward its goal of delivering around 400 and 80 of its most popular aircraft in 2025. Defense recorded a small operating profit and no charges, while services contributed nearly $1 billion in operating profit.

Why it matters: Since taking over as CEO in August 2024, Kelly Ortberg has laid a path for Boeing’s commercial and defense units to turn themselves around.

• The plan for the commercial jet business would have the 737 and 787 assembly lines operating in a normal state around midyear and their monthly production volume increasing by year-end. This bodes well for unlocking pent-up revenue and cash flows.
• In the defense segment, aggressive bids on fixed-price contracts for various military aircraft have cost Boeing billions. We estimate some charges still lie ahead, but Ortberg’s description of the company’s performance on those projects is more positive than it was just three months ago.

The bottom line: We have updated our forecast for near-term commercial jet deliveries and defense margins, resulting in an increase in our fair value estimate to $202 per share from $200 for wide-moat Boeing. The shares have regained some ground lately and trade about 15% below our updated fair value estimate.

Bears say: Boeing’s stock price has been buffeted continually over the last several years by myriad woeful headlines. Most recently, its machinists strike, a nearly 20% equity dilution, and sudden global uncertainty about trade tariffs have driven volatility in the shares.

• As we noted April 6, we anticipate that Boeing’s $460 billion aircraft order backlog will offer flexibility to direct deliveries away from tariffs, while its pretariff supply inventory and plentiful net aircraft exports can mitigate most of the cost pressure that tariffs could place on imported inputs.

Fair Value Estimate for Boeing

With its 3-star rating, we believe Boeing stock is fairly valued compared with our long-term fair value estimate of $202 per share, which represents an enterprise value of 91 times our 2025 adjusted EBITDA estimate and 23.6 times our 2026 estimate. We think enormous special charges and fleet groundings are mostly behind Boeing, and we forecast one more year of really hard slogging as the company clears up labor, manufacturing, and supply chain issues that hamper its production pacing. Our valuation reflects healthy long-term global demand for Boeing’s products and successful scaling up of deliveries and eventually margins on its bread-and-butter 737 and 787 models in 2026-27.

Boeing’s defense unit is exposed to more fixed-price development contracts than other contractors, which introduced more operating income variability than peers and resulted in numerous disappointing charges for cost overruns in the past several years. We model steady single-digit growth and a return to reasonable margins for the defense business by 2026.

Read more about Boeing’s fair value estimate.

Economic Moat Rating

We think Boeing merits a wide moat rating because it benefits from durable intangible assets and switching costs. Although Boeing has taken competitive hits from Airbus in the commercial aerospace duopoly, the commercial airplane market is large enough and so difficult to break into that it supports two wide-moat aircraft manufacturers: Airlines have almost no choice but to continue buying their products.

We think Boeing’s defense business is more exposed to operational risk than peers’ due to its higher exposure to underbidding on fixed-price contracts. We think the firm is turning a corner operationally and benefits from intangible assets stemming from the technical complexity of its products, switching costs from the time and effort the military faces to switch suppliers, and a lack of viable alternative suppliers. We see the global services segment as possessing intangible assets from proprietary access to aftermarket part designs as the FAA and other regulators require that spare parts be identical to the original design, as well as benefiting from switching costs stemming from a lack of alternative suppliers for such parts.

Read more about Boeing’s economic moat.

Financial Strength

Boeing’s capitalization suffered the brunt of the last three years’ turmoil. To keep the lights on in 2019-20, the company borrowed nearly $50 billion and ceased dividends and share purchases.

The company ended 2023 with about $52 billion in debt and $16 billion in cash, $4 billion less net debt than at the end of 2022. But subsequent turmoil in its core businesses left the company with $10.5 billion in cash and $57.5 billion in debt at the end of the third quarter of 2024. Facing a prolonged machinists’ strike and to stave off a debt ratings downgrade, the company announced layoffs to cut costs and issued $23 billion of combined equity and convertible preferred stock due 2027.

Read more about Boeing’s financial strength.

Risk and Uncertainty

We think Boeing’s biggest risks are operational risks that constrain supply and macroeconomic risks that limit demand, both of which the company has suffered over the last several years. We think Boeing deserves a High Morningstar Uncertainty Rating. It is working through much thornier supply chain risks than Airbus as it revives 737 MAX and 787 production and deliveries.

On the demand side, the pandemic dramatically reduced air travel and aircraft deliveries: Trade group IATA reported that passenger demand declined by nearly two thirds in 2020. While travel has returned to prepandemic levels in most markets, its recovery was patchy and may face renewed disruption at any time, though temporary disruptions of air travel would affect Boeing’s services business much more immediately than its commercial jet business, which has years of orders in backlog.

Read more about Boeing’s risk and uncertainty.

BA Bulls Say

• Boeing has a large backlog that covers several years of production for the most popular aircraft, which gives us confidence in aggregate demand for aerospace products.
• Boeing is positioned to benefit from emerging-market growth in revenue passenger kilometers and a robust developed-market replacement cycle over the next two decades.
• We expect commercial airframe manufacturing to remain a duopoly for most of the world for the foreseeable future. We think customers will not have any meaningful options other than continuing to rely on incumbent aircraft suppliers.

BA Bears Say

• Boeing’s reputation for engineering prowess may have taken a permanent hit since repeated manufacturing flaws in 737 MAX jets have hampered the assembly pace and disrupted airline and passenger schedules.
• In the long term, changed consumer behavior, especially among business travelers, could be unfavorable for aviation.
• Aircraft development is notoriously susceptible to development delays, hiccups, and cost overruns.

This article was compiled by Gautami Thombare.