Boeing (BA) stock has been down 31% over a year but has recovered somewhat in recent months following an agreement to end a seven-week workers’ strike. However, I’m still bearish on this engineering giant, noting an uncertain path to profitability, reputational challenges, recent poor performance, and competition, especially from the likes of SpaceX, in the fast-growing space realm. Given the current forward valuation multiples, I simply can’t invest in BA stock at its current state.
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Boeing’s Flight Path to Profitability
My bearishness on Boeing centers around its slow return to profitability. According to current forecasts, this is expected to be a gradual process. The company is projected to remain in the red for the Fiscal year ending December 2024, with an estimated loss per share of $16.04. However, the turnaround is anticipated to start in 2025, with a modest earnings per share (EPS) estimate of $0.24.
The road to recovery appears to gain momentum in 2026, with a significant jump in EPS to $4.26, representing a staggering 1,662.4% year-over-year growth, albeit because of a very low starting point. However, this would still represent 41x forward earnings — a considerable premium given this would be three years forward.
This trend is expected to continue, with EPS estimates reaching $10.82 by 2033, representing around 16.7x forward earnings. However, this is still a long way into the future, and it’s only based on one analyst’s forecasting.
The gradual nature of Boeing’s recovery is further evidenced by the declining number of analysts providing long-term estimates, from 23 for the near term to just 1 for the years beyond 2028. This underscores the difficulty in predicting Boeing’s long-term financial performance with certainty.
There will be Hurdles in Boeing’s Way
On a practical level, Boeing faces several significant hurdles on its path to recovery, with challenges spanning multiple sectors of its business. The company is grappling with quality control issues in commercial aviation, as evidenced by recent events, including the discovery of incorrectly installed fasteners on undelivered 787 Dreamliners, which compounded earlier scandals. These ongoing problems have further eroded trust in Boeing’s manufacturing processes, compounding the reputational damage inflicted by the 737 MAX crisis.
Due to costly fixed-price development contracts, Boeing is also bleeding cash in the defense sector. The company reported a $2.4 billion loss in its Defense, Space, and Security sector for Q3 2024, with $2 billion in charges on major programs. The KC-46A tanker program alone incurred a $661 million charge, partly due to a machinists’ strike. Other programs like the T-7 Red Hawk trainer and MQ-25 Stingray have also experienced significant cost overruns. This comes at a time when many defense contractors are seeing cash flow surge.
In the space realm, I believe Boeing faces stiff competition from Elon Musk’s SpaceX. While SpaceX has successfully completed multiple crewed missions to the International Space Station, Boeing’s Starliner program has underdelivered, causing reputational damage. The company has charged another $250 million to Starliner, bringing its total out-of-pocket expenses to $1.85 billion. It’s hard to see how Boeing will be able to compete with fast-moving, cash-rich SpaceX in the long run.
Boeing Aviation Performance Continues to Disappoint
Finally, my bearishness has been compounded by recent performance with a further decline in deliveries while orders have been decidedly underwhelming. November saw a significant drop in orders to just 49 airplanes, comprising 34 single-aisle and 15 wide-body jets valued at $3.9 billion.
More alarmingly, deliveries hit a multi-year low of only 13 airplanes in November, primarily due to a prolonged strike that severely impacted Boeing’s production capabilities. This figure starkly contrasts the 56 aircraft delivered in November 2023, highlighting the severity of the disruption. Year-to-date, Boeing’s net orders have fallen sharply to 370, valued at $30.4 billion.
Meanwhile, Airbus (EASDF) registered more than 700 orders in 2024, which underscores Boeing’s challenges.
Is Boeing Stock a Buy According to Analysts?
On TipRanks, BA is a Moderate Buy based on 12 Buys, seven Holds, and one Sell rating assigned by analysts in the past three months. The average BA stock price target is $190.29, implying a 6.11% upside potential.
The Bottom Line on Boeing Stock
I’m bearish on Boeing stock because the company simply faces too many challenges to make it an attractive prospect, coupled with some fairly unappealing earnings and valuation forecasts. With losses expected to continue throughout the current year and only modest earnings projected for 2025, the bull case depends on the business turning things around.
However, the forward valuation multiples seem unjustified given the company’s struggles. Boeing’s recovery appears to be a long-term proposition, making it difficult to justify an investment at current price levels.
Ongoing quality control issues in commercial aviation, substantial losses in the defense sector, and fierce competition from SpaceX in the space realm further compound Boeing’s problems. Recent performance has been disappointing, with a sharp decline in deliveries and orders lagging behind competitor Airbus.
