Vertical Research Partners on Monday raised its rating on Boeing (NYSE:BA) to Buy from Hold, pointing to easing supply chain pressures, stabilizing defense programs and progress in company culture.
Analyst Robert Stallard said the aerospace cycle has entered what could be considered the “mid-cycle,” with airline traffic growth normalizing near 5% and production bottlenecks at Boeing’s (NYSE:BA) commercial aircraft unit showing signs of improvement.
“To us, this suggests adopting a more balanced aero aftermarket versus OEM stance, and so we are upgrading one of the most prominent OEM names,” he wrote.
Boeing (NYSE:BA) is working to overcome a series of intertwined challenges that have weighed on its recovery. The company is still grappling with reputational damage from safety lapses tied to its 737 Max program, which have drawn scrutiny from regulators and airlines alike.
Supply chain and production outlook
Stallard said suppliers are increasingly delivering as planned for Boeing’s (BA) 737 and 787 programs, provided the company avoids ramping up too quickly. The integration of Spirit AeroSystems (SPR), which Boeing (BA) is in the process of acquiring, is also expected to strengthen internal production.
Defense and margins
On the defense side, risks tied to troubled programs appear to have stabilized, though profitability remains limited. Stallard said it could take several years to see sustained improvement, but near-term execution is less of a concern than before.
Cultural reset
Beyond operations, Stallard highlighted a shift in tone under Chief Executive Kelly Ortberg and Chief Financial Officer Jay Malave, describing it as less arrogant and better aligned with customers and suppliers. That shift, he said, has been recognized by stakeholders who view Boeing (BA) as more credible in meeting commitments.
Estimates and target
Vertical’s forecasts remain unchanged, with an adjusted loss of $2.36 a share for 2025 and adjusted earnings of $2.86 for 2026.
Free cash flow is expected to swing from a $3 billion outflow this year to $4.7 billion next. Vertical raised its price target to $270 from $242 a share previously based on 2027 estimates.
With OEM supply chains normalizing and airline growth steadying, now is a good time to pivot back toward OEM holdings, Stallard wrote.