Morningstar

Boeing Earnings: Recovery Plan Progresses With Mitigated Tariff Impact; Stock Undervalued

We think Boeing’s order backlog gives it flexibility to direct deliveries away from tariffs.

The Boeing logo on the building's exterior.
Aaron M. Sprecher via AP
Securities in This Article
Boeing Co
(BA)

Key Morningstar Metrics for Boeing

What We Thought of Boeing’s Earnings

Boeing BA delivered 104 737 MAX and 13 787 jets in the first quarter, a solid start toward its goal of delivering around 400 and 80 of its most popular aircraft in 2025. Defense recorded a small operating profit and no charges, while services contributed nearly $1 billion in operating profit.

Why it matters: Since taking over as CEO in August 2024, Kelly Ortberg has laid a path for Boeing’s commercial and defense units to turn themselves around.

  • The plan for the commercial jet business would have the 737 and 787 assembly lines operating in a normal state around midyear and their monthly production volume increasing by year-end. This bodes well for unlocking pent-up revenue and cash flows.
  • In the defense segment, aggressive bids on fixed-price contracts for various military aircraft have cost Boeing billions. We estimate some charges still lie ahead, but Ortberg’s description of the company’s performance on those projects is more positive than it was just three months ago.

The bottom line: We have updated our forecast for near-term commercial jet deliveries and defense margins, resulting in an increase in our fair value estimate to $202 per share from $200 for wide-moat Boeing. The shares have regained some ground lately and trade about 15% below our updated fair value estimate.

Bears say: Boeing’s stock price has been buffeted continually over the last several years by myriad woeful headlines. Most recently, its machinists strike, a nearly 20% equity dilution, and sudden global uncertainty about trade tariffs have driven volatility in the shares.

  • As we noted April 6, we anticipate that Boeing’s $460 billion aircraft order backlog will offer flexibility to direct deliveries away from tariffs, while its pretariff supply inventory and plentiful net aircraft exports can mitigate most of the cost pressure that tariffs could place on imported inputs.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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