A Turnaround Stock to Buy Before It Rebounds Further

After enduring a wave of woeful headlines in the past few years, Boeing is recovering. Recent large aircraft purchases from the UK and Qatar—as well as permission from China’s authorities for Boeing to resume deliveries there—lower the risk that trade disputes will mar aerospace exports over the long term. We think Boeing’s wide economic moat, enormous backlog, and new leadership bode well for the future. In fact, we recently raised our fair value estimate for Boeing stock by 20%, to $242. Even though the shares are having a great 2025, they still look 14% undervalued. Boeing is among Morningstar chief US market strategist Dave Sekera’s 5 Stocks to Buy to Profit from Trump’s Trade Deals.

Boeing’s narrow-body plane business was battered by the extended grounding of its 737 MAX due to two fatal crashes of the plane. Then the pandemic cut air travel by two thirds between 2019 and 2020. Boeing had to cease deliveries of its workhorse plane for 20 months as manufacturing defects from Spirit AeroSystems SPR, its fuselage supplier, came to light. It aims to expand 737 MAX production beyond the current rate of 38 planes per month to meet emerging-market demand once its manufacturing process has again been approved by the Federal Aviation Administration. The wide-body 787 Dreamliner also experienced a production halt, as manufacturing quality issues were ironed out and planes refurbished. We don’t expect deliveries to return to 2019 levels until 2029. Boeing supplies military products to governments and aftermarket services to its commercial customers, which together generate just over a third of its operating income over a cycle.

Key Morningstar Metrics for Boeing

• Fair Value Estimate: $242
• Star Rating: 4 Stars
• Economic Moat Rating: Wide
• Uncertainty Rating: High

Economic Moat Rating

We think Boeing merits a wide moat rating because it benefits from durable intangible assets and switching costs. 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 Boeing’s and Airbus’ EADSY products. We think Boeing’s defense business 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 well as benefiting from switching costs stemming from a lack of alternative suppliers for parts.

Read more about Boeing’s moat rating.

Fair Value Estimate for Boeing Stock

Our $242 fair value estimate represents an enterprise value of 27 times our 2026 EBITDA estimate. We think enormous special charges and fleet groundings are mostly behind Boeing; 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. Overall, we expect operating margin to improve to about 13% at midcycle versus 12% in 2018, resulting in more than 20% compound earnings per share growth between 2026 and 2034. Including newly issued preferred equity that accounts for about 2.8% of the capital structure, we calculate an 8.6% weighted average cost of capital.

Read more about Boeing’s fair value estimate.

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. It is working through much thornier supply chain risks than Airbus as it revives 737 MAX and 787 production and deliveries. 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. Boeing’s complex manufacturing process for commercial jets marred the company’s results as numerous errors and lapses in quality emerged between 2020 and 2024, made worse by turnover during the pandemic and a strike by the machinists union in late 2024. A risk in the aftermath of the 737 MAX grounding and production rework on the 787 rests on global supply chain disruptions.

Read more about Boeing’s risk and uncertainty.

Boeing Bulls Say

• Boeing has a large backlog that covers several years of production for its 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 besides the incumbent aircraft suppliers.

Boeing 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 airlines’ and passengers’ schedules.
• In the long term, changed consumer behavior, especially among business travelers, could be unfavorable for aviation.
• Aircraft development is susceptible to development delays, hiccups, and cost overruns.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of May 21, 2025.