Excerpt: While Boeing (NYSE:BA) continues to face challenges, including manufacturing delays, regulatory oversight, and new trade tariffs, recent multi-billion dollar commitments from airlines in Taiwan and the UK, alongside analyst upgrades citing improved cash flow visibility, indicate the aerospace manufacturer may be turning a corner.
Boeing has been going through a wildly turbulent time because of manufacturing difficulties, regulatory hurdles, and now looming tariffs from increasing trade tensions between some of the world’s largest economies.
Through these considerable headwinds, the aerospace giant has also secured significant new orders and positive analyst commentary. This creates the possibility of an improved recovery as production stabilizes and international trade deals are established.
Boeing’s Recent Issues and Tariff Impacts
Boeing has dealt with several serious problems in recent years, the latest being the looming impact of trade tariffs amid the rise of multi-country trade disputes. In April, China ordered its airlines to suspend Boeing jet deliveries in retaliation for the U.S. imposing a 145% tariff on Chinese goods.
If this turns into an ongoing situation, it will not really help Boeing, as China is one of its largest growth markets, with Airbus already with a dominant share.
The order affects planned deliveries to China’s three largest airlines - Air China, China Eastern Airlines, and China Southern Airlines - which intend to deliver 179 Boeing planes in China between 2025-27.
In addition to the China situation, it appears that Boeing is still trying to work through the number of manufacturing issues, like a blowout in a new MAX 9 in January 2024 that triggered another round of regulatory scrutiny. This complication, along with very slow recovery from the 737 MAX situation after two fatal crashes in 2018 and 2019 that killed almost 350 people and caused an unprecedented worldwide grounding of the aircraft, will be a heavy burden on Boeing’s plans for growth.
Since the blowout incident, Boeing’s shares have lost more than a third of their value and concerns about quality control and regulatory compliance remain top of mind for investors. The various obstacles are taking place against a backdrop of supply chain challenges - with more ongoing labor issues, including a recent strike by factory workers affecting scheduled production timelines and timelines.
Boeing’s Recent Wins and Path to Recovery
Although difficulties persist, Boeing has achieved several key victories that could pose a potential path to recovery.
In its most recent win, Taiwan’s China Airlines has placed an order for 14 Boeing 777X wide-body airplanes, including 10 Boeing 777-9 passenger airplanes, but also included 4 Boeing 777-8 freighters, and has retained options for 5 additional 777-9s and 4 additional 777-8 freighters.
This was part of the announcement that China Airlines committed to a total of 10 Boeing 777-9 passenger airplanes and 4 777-8 freighters for US $11.9 Billion at list prices, again part of a larger announcement made in December.
Moreover, a significant deal took place in the International Airlines Group, the parent company of British Airways is planning to buy 32 new aircraft from Boeing as per a GBP9.8 billion deal worth USD13 billion for aircraft to be delivered starting in 2029. The group purchased Boeing 787-10 aircraft for British Airways and kept options for 10 more aircraft. This announcement came just one day after a US/UK trade agreement lifted tariffs on the aerospace industry.
On another positive note, UBS added more fuel to the fire by raising their 12-month price target for Boeing to $226 from $207; citing a stronger free cash flow outlook and improved visibility on tariffs.
UBS believes that tariff headwinds may not have a significant impact on Boeing’s recovery. The investment bank modeled out a 2026 free cash flow impact of just $453 million at full reciprocal tariffs, and $275 million at current tariff levels, which shows Boeing can weather the costs while maintaining its recovery path.
UBS analysts pointed out that "Boeing has prioritized the continuity of supply over price negotiations" and that under full reciprocal tariffs, has estimated the direct cost impact will be under $500 million per year -- which is reasonable to believe for companies of Boeing’s size; especially when they could see free cash flow improvement as they ramp up MAX production.
Boeing’s Stock Gains as Firm Pilots a Turnaround
Boeing (NYSE: BA) is trading at $192.88 in pre-market at the time of this writing on May 9, up 0.62% from yesterday’s close price of $191.70. (Yesterday, $BA gained a solid 3.31%).
Boeing has been moving in a positive trajectory after yesterday’s increase of $6.14. Investors appear to be optimistic regarding Boeing following recent orders and analyst upgrades. The current price level is within the 52-week price range of $128.88 to $196.95, at the top of this price range.
Boeing has a market cap of $144.54 billion, and a beta (5Y Monthly) of 1.40 indicating the stock is more volatile than the broader market. Boeing’s financial numbers reflect challenges, as the company has a negative profit margin of -16.58%, return on assets of -4.10%, and TTM diluted EPS of -$17.96. Boeing does have a strong cash position of $23.65 billion.
YTD performance looks to have turned positive at 8.31%, above the S&P 500 YTD decline of -3.70%.
Long-term performance has been mixed as evidenced by 1-year performance is now 6.29%, 3-year real returns are 28.74%, and 5-year performance is 43.66%. Analyst ratings for Boeing stock are mostly positive, with 24 out of 30 analyst ratings as either Buy or Strong Buy.
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This article was written by Shane Neagle, editor in chief of The Tokenist. To get trade ideas and pre-market insights delivered to your inbox every morning premarket, click here to sign up for Bull Whisper (free), brought to you in partnership with The Tokenist.