Boeing takes a step forward in its turnaround. Here’s what to watch for next
Boeing took another step in the right direction Wednesday, delivering relatively tidy first-quarter results. The planemaker also stood by its full-year guidance for the key metric to grade its turnaround, giving us confidence to stick with the stock. Revenue in the first quarter rose 14% from a year ago to $22.22 billion, ahead of the $21.78 billion consensus, according to LSEG. Adjusted loss per share was 20 cents, much better than the 83-cent loss expected by Wall Street, LSEG data showed. BA YTD mountain Boeing’s year-to-date stock performance. Boeing shares rose more than 4% on Wednesday to above $229 apiece. If the gains hold, the stock would register its highest close since March 6, in the early days of the Iran war. Bottom line This was an encouraging report and a feather in the cap of CEO Kelly Ortberg. More recently, shares of Boeing and its aerospace peers came under pressure as investors worried that higher jet fuel prices and heightened instability in the Middle East would dampen flying demand and profits. That is clearly a risk for the industry, especially for the airlines themselves. But our investment in Boeing isn’t based on flying appetites over the next few months. It’s about Ortberg cleaning up the troubled planemaker and improving its production quality and levels so that Boeing can deliver on its stuffed backlog — and keep securing new orders. That longer-term view is why we twice picked up Boeing shares during the Iran war sell-off (at roughly $215 and $200 a share, respectively). It is also why we trimmed our position last week (around $223), acknowledging we got a little greedy ahead of Boeing’s noisy January earnings report, and we refused to make the same mistake twice. It was a matter of discipline, not doubt in its future. With the numbers now in hand, it is apparent Boeing turned in a cleaner report than last time. No surprising accounting charges were booked, and the cash flow performance checked multiple boxes. The first quarter free cash flow (FCF) was better than expected, albeit still negative. Most importantly, though, Boeing expects FCF to turn positive in the second half of 2026, and CFO Jay Malave reiterated its full-year outlook of $1 billion to $3 billion. Cash flow is the best way to grade Ortberg at this stage of the turnaround. As that profile improves and turns solidly positive, earnings should follow. Ortberg took over as CEO in August 2024. A wiring issue that delayed some first-quarter 737 Max deliveries will not impact its full-year guidance of 500, Ortberg reiterated on the earnings call. In fact, he said most of the affected planes have already been delivered. Boeing also continues to expect to deliver between 90 and 100 planes in its 787 family. Crucially, Boeing also stood by the timeline to start deliveries for three chronically delayed aircraft models: the single-aisle 737 Max 7 and Max 10, and the wide-body 777X. The yearslong delays have driven up costs and prevented cash from flowing into Boeing’s coffers because customers pay for the bulk of the plane upon delivery. The Max 7 is the smallest plane within the best-selling Max family; the Max 10 is the largest. Boeing expects both versions to receive certification from regulators this year, with deliveries beginning in 2027. “I’m very pleased with the progress on the certification. We’ve got all the authorizations we need from the FAA. We’re just finishing the flight-test program right now, and we’re making great progress every day,” Ortberg told CNBC on Wednesday morning. “That will enable us to deliver the [Max 7 and 10] into the market, which is going to be really important for our next year.” Designed for long-haul flights, the twin-engine 777X is also expected to start deliveries next year once it finishes the certification process, according to Boeing. In March, the FAA gave Boeing the go-ahead to start on the fourth of a five-phase process . “We’ve got more work to do on that program,” Ortberg said. “But we’re making great progress every day. The airplanes are flying. We’re ticking off the authorizations to get to the certification.” Boeing’s commercial unit booked 140 net orders in the first quarter, pushing its backlog to a record $576 billion, up from $567 billion at the end of 2025. That consists of over 6,100 planes. Asked by CNBC’s Phil LeBeau whether any Middle East-based airlines have asked to delay their orders due to the war, Ortberg responded: “No, they’re not. Clearly, they have disruption in their current operation. But we have had no discussions with any of the Middle East carriers on deferring orders. This is a long-cycle business. They need the aircraft. … I will tell you, I’ve had customers outside the Middle East who have reached out and said, ‘Hey, if there are any airplanes available, we’d like to jump the line.’ So, I think we’re going to manage our way through this Middle East impact OK.” A few questions to watch going forward: Will Boeing get FAA approval to increase production of 737 Max jets to 47 a month from the current rage of 42? Boeing expects to get to 47 this summer, provided the FAA gives its blessing. The regulator has capped Boeing’s output since January 2024 in response to the Alaska Airlines door plug incident . The more planes Boeing makes and delivers, the better the cash flow lift. Ortberg told CNBC he has been “hearing good things on quality” since Boeing stepped up to 42 planes a month during its fourth quarter. Will President Donald Trump ‘s planned mid-May meeting with China’s Xi Jinping lead to major orders for Boeing ? The company hasn’t seen significant orders from Chinese carriers in many years. Ortberg said on the earnings call he is “highly confident” that it will come to fruition, suggesting it will be a “big number.” What will the requested $1.5 trillion Pentagon budget mean for Boeing’s defense business? We were pleased with the first-quarter results of Boeing’s defense-and-space segment, which saw a 21% year over year increase in revenue to $7.6 billion. We’re hopeful this momentum can continue. Boeing makes military jets, weapons systems, and more. On April 1, Boeing and the Pentagon announced a seven-year deal to increase production of its PAC-3 seekers for missiles. Analysts at Jefferies previously estimated revenue from these seekers could climb to $1.8 billion over the framework of the deal, up from about $600 million today. Add this all up, and we’re feeling good about Boeing’s current trajectory. For now, we are reiterating our price target of $275 a share and 2 rating , which means we would be buyers on a pullback. (Jim Cramer’s Charitable Trust is long BA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
About the Author
Related
Discover more from InfoVera USA
Subscribe to get the latest posts sent to your email.
