Boeing Company (NYSE:BA) has navigated a challenging period characterized by operational and market uncertainties, yet recent developments suggest the aerospace giant is regaining its footing. The company's fourth-quarter results reflect a meaningful increase in revenue and free cash flow, providing investors and analysts with a more concrete understanding of its trajectory toward normalization.
In the fourth quarter, Boeing reported revenue of approximately $24 billion, marking an impressive 57% increase year over year. This strong performance benefits in part from a comparison against a previous period affected by strike actions, yet the improvement is nonetheless noteworthy. Moreover, Boeing generated free cash flow (FCF) near $400 million for the quarter, surpassing expectations and contributing to a firmer baseline as the company looks ahead to the pivotal year of 2026.
RBC Capital Markets conveys a constructive stance on these financial disclosures. Analyst Ken Herbert interprets the quarterly update as a reset of credibility, emphasizing a return to execution as the focal point of Boeing's narrative. His outlook on the company remains positive, exemplified by an Outperform rating and an increased price target raised from $265 to $275. Central to this optimism is improved visibility into Boeing's free cash flow forecast and a more defined pathway toward recovery.
Enhanced Transparency on 2026 Free Cash Flow
A critical aspect of Boeing's renewed outlook centers on refined guidance for its 2026 free cash flow. The company reaffirmed its expectation for FCF within the range of $1 billion to $3 billion, establishing approximately $2 billion as a baseline for planning purposes. More importantly, Boeing delineated the specific factors influencing the transition toward normalized free cash flow figures projected at $7 billion to $9 billion, which Herbert interprets as bolstering confidence in the potential to exceed $10 billion in the medium term.
This detailed framework provides clarity on the various "puts and takes" affecting cash flow over the next few years. Chief cash flow headwinds identified include increased capital expenditures, financial implications from the Spirit AeroSystems agreement, ongoing investments in the 777X program, a payment to the Department of Justice, and continued pressures from customer advances and concessions. Additionally, underperformance within the Defense segment contributes to cash flow challenges.
Offsetting these factors is an anticipated wind-down of inventory levels for the 737 MAX and 787 models, expected to improve cash conversion rates over time. This inventory reduction should aid Boeing's gradual restoration of a stronger cash flow profile as the company advances toward normalized operational status.
Strategic Production and Delivery Goals
Boeing's operational plans for 2026 reinforce its recovery trajectory. The company is targeting delivery volumes of approximately 500 units for the 737 MAX and near 95 units for the 787, representing an overall delivery increase of about 10% compared to current levels. Regarding 737 MAX production, Boeing concluded the latest quarter producing roughly 42 aircraft per month. The company intends to escalate this rate to 47 units monthly by mid-2026 and maintain momentum toward reaching 52 per month by early 2027.
Notably, Boeing expects to complete delivery of nearly all pre-2022 737 MAX inventory during the first quarter of 2026, with the exception of roughly 35 MAX-7 and MAX-10 aircraft. The firm aims to secure certification for these specific models by the latter half of 2026. As for the 787, Boeing currently maintains a steady output of eight aircraft per month, aspiring to raise production to 10 monthly units by the end of 2026, with plans to eventually reach mid-teens monthly deliveries in the longer term.
Financial models from RBC Capital Markets project Boeing's free cash flow will rise to $2.5 billion in 2026, increase further to $7 billion in 2027, and approach approximately $10 billion by 2028. The 777X program is recognized as a pivotal determinant of these future cash flow outcomes. While the forecast reflects notable optimism, the analysis also acknowledges supply chain risks, particularly linked to efforts to accelerate 737 MAX production beyond 47 units per month.
Valuation Insights
Ken Herbert's valuation approach for Boeing involves applying a 22.5 times multiple to estimated 2028 free cash flow of nearly $10 billion, culminating in a target stock price of $275. This multiple exceeds Boeing's historical averages and stands higher than valuations assigned to comparable industry peers such as Airbus SE. Nonetheless, the elevated multiple is considered justified due to Boeing's progression toward a normalized operational environment and its projected expansion in production and cash generation capacity.
The analyst foresees that as Boeing meets key delivery and manufacturing milestones, investor confidence in the company's earnings potential will strengthen. Importantly, the valuation emphasis is expected to shift more heavily toward free cash flow performance rather than near-term earnings metrics. This perspective underpins the continued Outperform rating and supports the elevated price target.
Additional Analyst Perspectives
In alignment with RBC's constructive outlook, UBS analyst Gavin Parsons maintained a Buy rating on Boeing while raising his price target from $275 to $285. Similarly, John Godyn from Citigroup upheld a Buy rating, adjusting his price forecast upward from $270 to $290. These revisions reflect a market consensus that Boeing is poised for a meaningful recovery supported by clearer financial visibility and robust operational targets.
At the time of these analyses, Boeing's stock price hovered at approximately $245.57 per share, marking a modest gain. The shares approach a 52-week high near $254.34, demonstrating investor enthusiasm tied to the company's improved performance profile.