Boeing Stock Is Down 14% Since Earnings: Is the Market Pricing In Turnaround Risk or Creating a Buy Opportunity?
Why it matters: Boeing's recurring 'temporary' issues are preventing the company from generating the $10 billion in free cash flow it achieved before 2018.
- Boeing (BA) stock has declined 14% since its January 27 earnings report, underperforming the S&P 500 index.
- Boeing holds a significant $682 billion backlog, with over $560 billion attributed to Boeing Commercial Airplanes, supporting future growth.
- CFO Jesus Malave anticipates Boeing will generate $1 billion to $3 billion in free cash flow (FCF) in 2026, stating the previous $10 billion FCF target remains 'very obtainable' and that current negative factors are 'temporary'.
- Recurring 'temporary' factors impacting FCF include 777X certification delays, customer compensation for 737 MAX and 787 delivery delays, charges on fixed-price development programs at Boeing Defense, Space & Security (BDS), and increased capital expenditures.
- Investors are seeking several quarters of blemish-free execution, without certification issues, delivery delays, defense charges, or manufacturing quality problems, before fully buying into Boeing's turnaround.
Boeing's stock has dropped 14% since its January 27 earnings report, despite a substantial $682 billion backlog, raising questions about whether the market is pricing in turnaround risks or creating a buying opportunity. While CFO Jesus Malave projects $1 billion to $3 billion in free cash flow (FCF) for 2026, with potential for 'high single digits' FCF when 'temporary' factors are excluded, these recurring issues—including 777X certification delays and defense program charges—continue to hinder investor confidence.
