Boeing: Bernstein’s Top Pick in Global Aerospace & Defense

Over the past year, Boeing (NYSE: BA) has demonstrated compelling production momentum and improving fundamentals, leading Bernstein to name it their top pick in Global Aerospace & Defense. With commercial aircraft demand slated to outstrip supply well into the 2030s and defense contracts gaining traction, Boeing appears poised for a sustained recovery. Below, we explore why Bernstein’s bullish case matters, how production ramp‑ups are unfolding, and what fundamental and valuation metrics say about Boeing’s upside.

Bernstein’s Bullish Thesis

Bernstein analysts describe Boeing as “a momentum stock” that historically has accelerated once BCA (Boeing Commercial Airplanes) returned to an upward trajectory. Three key pillars underlie their Outperform rating and $249 price target:

1. Production Ramp‑Up in Commercial Aircraft

   • The 737 MAX line is nearing stable production of 38 jets per month, with CEO Kelly Ortberg forecasting 42 per month by year‑end and 47 per month six months thereafter.

   • The 787 Dreamliner line is set to hit 7 jets per month soon, signaling a normalized supply cadence.

   • Both the 737‑7 and 737‑10 certification timelines remain on track, preserving Boeing’s competitive positioning against Airbus’s A320neo family.

2. Improving Defense Fundamentals

   • No accounting charges in Q1 and Boeing’s recent win of the F‑47 program underline stabilization in its defense segment.

   • A stronger backlog from U.S. Department of Defense contracts—combined with an improving production chain—bolsters cash flow visibility.

3. Attractive Valuation

   • Bernstein notes that Boeing’s valuation multiple remains below pre‑737 MAX grounding and pandemic levels.

   • With liquidity concerns easing (especially after the Jeppesen divestiture), Boeing’s balance sheet is transitioning from repair mode to growth investment.

Production Momentum: 737 MAX & 787

After the dual crises of the MAX groundings and COVID‑19 travel collapse, Boeing’s commercial lines have focused relentlessly on retooling supply chains and regaining customer confidence. Key milestones include:

• 737 MAX Line Nearing 38/Month
  CEO Kelly Ortberg’s update at Bernstein’s Strategic Decisions Conference confirmed that the 737 MAX assembly is approaching a stable 38 jets per month. Bernstein projects 42 deliveries per month by year‑end.

• Path to 47 Jets per Month
  With ongoing efficiency gains, Boeing expects to reach 47 jets per month six months after hitting 42, driven by improved supplier performance and expanded labor capacity.

• 787 Dreamliner at 7/Month
  The 787 production line, which fell to as low as two per month during the worst of supply disruptions, is scheduled to ramp to 7 per month “soon,” signaling that Boeing has largely resolved the structural issues that plagued the Dreamliner program.

As a result, Boeing’s forward commercial backlog remains robust, and airlines are positioning for a post‑pandemic recovery in travel demand. According to the Financial Modeling Prep Ratios (TTM) API, Boeing’s operating margin has improved from 0.2% in Q1 2022 to 4.7% in Q1 2025 . These margin expansions reflect higher production efficiency and better cost controls as the company scales back to healthier throughput.

Defense Segment Stabilization

Beyond commercial aviation, Boeing’s defense business is gaining traction:

• F‑47 Program Win
  Bernstein highlighted Boeing’s recent F‑47 contract as evidence that its defense pipeline is stabilizing. Winning this program helps replace lost revenue from earlier program cancellations.

• No Q1 Charges
  The absence of significant writedowns or charges in Q1 2025 suggests that Boeing has cleaned up its backlog and settled warranty exposures linked to the MAX groundings.

• Liquidity & Jeppesen Sale
  With the Jeppesen divestiture nearing completion, Boeing’s near‑term liquidity cushion is strengthening. Operating cash flow in Q1 2025 reached $1.2 billion—up from negative cash flow in mid‑2023—underscoring the successful transition from crisis management to expansion mode.

Valuation: Still Below Historical Norms

A key part of Bernstein’s bullish thesis is that Boeing remains undervalued relative to its historical P/E and EV/EBITDA multiples. Based on data from Financial Modeling Prep’s Ratios (TTM) API, Boeing currently trades at:

• P/E (TTM): 13.5× vs. 18×–20× pre‑grounding

• EV/EBITDA: 7.8× vs. ~10× in 2019

These metrics suggest the market still assigns a discount for residual execution risk. However, as production efficiency normalizes and defense revenues stabilize, those multiples could realign with long‑run averages. If Boeing reclaims even a mid‑teens P/E, the stock could materially outperform from current levels.

Risks and Considerations

While Bernstein’s call rests on solid data points, investors should be aware of potential headwinds:

• Supply Chain Bottlenecks
  Even as Boeing makes strides, persistent supply chain challenges—especially in composites and engine deliveries—could delay further ramp‑ups.

• Regulatory Hurdles
  FAA certifications for the 737‑7 and 737‑10 remain on schedule, but any unexpected delays could push deliveries into 2026.

• Macro Volatility
  Elevated interest rates and potential global economic slowdowns may temper airline CAPEX budgets, limiting incremental orders.

Given these uncertainties, a phased position—accumulating shares as production milestones are met—may offer the best risk‑reward trade‑off.

Actionable Takeaways

1. Monitor Production Metrics
   Track monthly 737 MAX and 787 output via the Market Biggest Gainers API to gauge aftermarket sentiment on Boeing suppliers and key components.

2. Watch Defense Bookings
   Stay alert for Q2 and Q3 2025 defense order announcements and margin guidance in Boeing’s upcoming 10‑Q filings (accessible through the SEC Filings API).

3. Valuation Re‑Rating Potential
   If Boeing’s TTM EV/EBITDA rises above 9× over the next 12 months—aligning with pre‑crisis levels—the stock could see significant multiple expansion.

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