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Investing.com -- Bernstein named Boeing (NYSE:BA) its top pick in Global Aerospace & Defense, citing production momentum, improving fundamentals, and a compelling valuation.
“Boeing is a momentum stock,” analysts wrote in a new presentation. “It has historically moved rapidly once the company moved onto an upward trajectory at Boeing Commercial Airplanes (BCA).”
With commercial market demand expected to exceed production into the 2030s, Bernstein sees Boeing well-positioned for a sustained recovery.
The firm pointed to key developments supporting its bullish call. Production rates are ramping, with the 737MAX line approaching “stable 38/month,” according to CEO Kelly Ortberg, who spoke at Bernstein’s Strategic Decisions Conference.
Ortberg said Boeing could reach 42/month by year-end, with 47/month coming “at least six months later.” The 787 line is also said to be moving to 7/month soon, and certification for the 737-7 and 737-10 remains on track.
Bernstein also highlighted an improving outlook in defense: “There were no charges in Q1 and Boeing won the F-47 program.”
The firm believes liquidity is no longer a concern, especially with the Jeppesen sale nearing completion.
Valuation, too, is said to support the bullish view. “Our valuation multiple is below what we saw back in the ‘normal’ period for Boeing,” Bernstein said, referring to the time before the 737MAX groundings and the pandemic.
The firm maintained a price target of $249 on the stock, reiterating its Outperform rating.
Free cash flow remains a key focus, according to Bernstein. They noted that Ortberg said, “Meeting FCF goals this year and beyond depends most on getting production rates up.”