TLDR
- Bernstein names Boeing top aerospace investment choice for 2026, raises target to $298
- Production climbing with 737 at 42 aircraft monthly and 787 at 8 aircraft monthly
- Free cash flow expected to exceed $11 billion by 2028 as output accelerates
- Order backlog extends through 2030 with only half of current 737 and 787 orders fulfilled
- Defense unit projected positive cash generation in 2027 following F-47 contract win
Bernstein designated Boeing as its leading Aerospace & Defense investment for 2026. The brokerage raised its price target to $298 from $277.
The firm maintains an Outperform rating on the aerospace manufacturer. Boeing currently trades at $242.61, making the target a 23% premium to current prices.
Douglas Harned and the Bernstein analyst team see increasing confidence in Boeing’s recovery path. The market faces a situation where demand will surpass supply through 2030.
Both Boeing and Airbus benefit from this dynamic. Execution becomes the key differentiator between the two manufacturers.
Boeing demonstrates a pattern of quick advancement once investors trust production growth. The company’s performance on major aircraft programs drives stock movement.
Current 737 production runs at 42 aircraft per month. The 787 program operates at 8 units monthly.
Production Increases Fuel Growth Thesis
These production rates are scheduled to climb over five years. Bernstein anticipates expanding margins and cash generation as output rises.
The existing order backlog tells a powerful story. Boeing will deliver only half of current 737 and 787 orders by 2030.
This figure excludes new orders anticipated over coming years. The 777X backlog remains almost entirely unfulfilled.
Cash flow concerns emerged in the fourth quarter. Certification delays for the 777X and increased capital spending for facility expansion triggered worries.
Bernstein sees the resulting stock decline as a chance to buy. The 777X problems relate to timing rather than structural issues.
Higher capital expenditure is required to handle unprecedented backlogs. Management guided for low single-digit billions in free cash flow for 2026.
This guidance factors in a $700 million headwind from a Department of Justice payment. The near-term picture looks modest but sets up stronger performance ahead.
Cash Flow Outlook Strengthens
Future years show dramatic improvement potential. Bernstein projects free cash flow above $11 billion in 2028.
Rising production rates combined with unwinding inventories drive this forecast. The transformation from low single-digit billions to over $11 billion represents substantial growth.
Defense operations appear to be turning a corner. Charges that weighed on cash flow in recent years are mostly resolved.
The F-47 program win provides a catalyst for Boeing Defense. The segment should return to positive cash generation in 2027 according to Bernstein.
Boeing Global Services maintains solid performance. Aftermarket demand and expanding commercial business support high margins in this division.
Delivery Performance Rebounds
Boeing delivered 600 aircraft in 2025, up 72% year-over-year. This marked the strongest delivery performance since 2018.
Net new orders reached 1,075 last year. Boeing beat Airbus in order intake for the first time in seven years.
The fourth quarter saw 160 commercial aircraft deliveries. These spanned multiple programs including 737, 767, 777, and 787 Dreamliner variants.
Delta Air Lines placed an order for up to 60 Boeing 787 Dreamliners recently. The package includes 30 firm 787-10 orders and 30 additional options.
