"The End of the Beginning": why does a skeptical analyst recommend buying Boeing stock?

An analyst at research firm Vertical Research Partners, who downgraded Boeing shares to Neutral five years ago, has now recommended buying them, expecting a 17% rise. He believes the aircraft maker is already recovering from a string of 2024 setbacks and will break even in 2026.

Vertical Research analyst Rob Stallard upgraded shares of Boeing from Neutral to Buy. He also raised their target from $242 to $270, which is almost 17% above the closing price on Sept. 8. Stallard downgraded Boeing's stock to Neutral back in early 2020, shortly before the pandemic, Barron's notes.

It is "the end of the beginning," Stallard wrote, making reference to Winston Churchill's famous quote, "It is not yet the end. And not even the beginning of the end. But it may be the end of the beginning." With this phrase, Churchill celebrated the first important British victory over Nazi Germany in 1942. It signified that there was a long road ahead, but the turning point had already been passed.

Boeing shares rose 0.6% to $231 in Monday trading. They have risen 30.5% since the beginning of the year.

According to Stallard, whose note is cited by Barron's, demand for aerospace products remains robust, Boeing's supply chain problems are gradually being resolved and the defense division is stabilizing after a period of losses on fixed-price contracts. The corporation took losses on them due to high inflation during the coronavirus pandemic.

Corporate culture is also changing. "While less tangible than business metrics, we believe Boeing has also made progress in overcoming problems in corporate culture," the analyst said. - 'We see that there is noticeably less arrogance in the company..... Customers and suppliers are seeing improvements, and many now say they have more confidence in Boeing's ability to deliver on its promises.

Stallard expects the aircraft maker to post a loss per share of $2.36 in 2025, reach a profit of $2.86 per share in 2026, and grow earnings to $6.2 in 2027. The analyst cites increased aircraft deliveries as the main source of profit growth. The company expects to ship about 580 airliners in 2025, about 680 in 2026 and already 760 in 2027.

Boeing hasn't posted an annual profit since 2018 due to a series of crashes of its airplanes, and a coronavirus. The bad year of 2024 for the company began with an incident involving an Alaska Airlines airplane that had a door plug ripped out during flight. An investigation revealed that the panel was missing several mounting bolts, confirming a decline in Boeing's corporate culture, even though the airplane maker's contractor, Spirit AeroSystems, was responsible for manufacturing the particular section. This led to a change in Boeing' s CEO: Dave Calhoun was replaced by Kelly Ortberg.

In 2025 Boeing received several major contracts. On August 27, it became known about Korean Air ordering 103 aircraft. Qatar Airways ordered at least 160 Boeing wide-body jets during U.S. President Donald Trump's visit to Doha in May. Saudi Arabia plans to buy 30 airplanes. The aircraft maker, sources told Bloomberg, is also close to a contract to supply up to 500 planes to China.

From January through July, airlines ordered nearly 700 airliners from Boeing, compared with about 230 orders during the same period in 2024, Barron's calculated. But Boeing has already accumulated a huge backlog: more than 6,500 outstanding orders, and an official backlog of just under 6,000 airplanes. That's more than a decade's worth of work at current production rates, Barron's wrote. So the main challenge for Boeing is to speed up production.

According to FactSet, 81% of analysts tracking Boeing stock today recommend buying it. The average for the S&P 500 Index is about 55%. The Wall Street consensus price target is $260.3 per share, up 12.6% from Monday's closing price.

This article was AI-translated and verified by a human editor