One thing I used to enjoy whenever I was at an airport is watching planes take off and land. I sometimes caught myself silently guessing where they were headed and how many people were counting on getting there on time.
It’s easy to forget just how much work goes into getting those aircraft into the sky, from manufacturing to maintenance and everything in between. Behind every flight is an airline that needs enough planes to keep its schedule running, and getting those aircraft delivered isn’t always as simple as placing an order.
Plenty of people are waiting on Boeing. Its backlog hit a record $745 billion, including more than 6,300 commercial airplanes, and its third-quarter revenue was $24.2 billion, primarily reflected by higher defense and services volume.
CEO Kelly Ortberg pointed to the company’s certification of the 737-7 and 737-10 and selection to build the Navy’s sixth-generation fighter as important steps, but added: “We are not done.”
Kelly said Boeing is focused on safety, quality, and lean execution. However, turning that backlog into cash is taking longer than Wall Street hoped.
Also Read: New Boeing MAX 10 with special safety upgrade approved to fly travelers
Boeing’s cash target slips a year
Boeing guided to free cash flow, the money left after running the business and investing in it, of $3 billion in 2027, $6 billion in 2028, and $10 billion in 2029.
Consensus had been $5.5 billion, $9.6 billion, and $12.6 billion, so the $10 billion goal moves out by about a year. Cumulative cash for 2026 to 2029 is now $21 billion, against $30 billion expected.
Unsurprisingly, investors reacted quickly. Shares fell 10.7% on Q3 results, while the S&P 500 rose 0.6%, Morgan Stanley noted in a note shared with me at TheStreet.
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The stock is down 23.02% this year, 25.16% over one year, and 19.59% over five, according to Yahoo Finance. The stock also trades at a new 52- week low.
Morgan Stanley kept an Equal-weight rating and cut its target to $195 from $225. The bank sees about 16% upside from the $168.18 close on Oct. 27 and calls risk-reward balanced.
Why Boeing’s planes aren’t turning into cash faster
The reasons are practical. How?
Boeing now expects to raise 737 MAX production to 52 a month in the second half of 2027, not the first half, because of wing and fuselage constraints. Then the 787 is limited by engines and seat certification. The 777X will use cash through 2028 before turning positive in 2029.
Spending is rising, too. Capital spending should reach about $5 billion in 2027, up $1 billion, for defense programs and new capacity, then fall to about $4 billion. Customer advances, deposits airlines pay before delivery, are expected to fall by a few billion dollars off record 2026 levels.
When I book a flight, my biggest concerns are usually the ticket price, departure time, and whether I’ll arrive on schedule.
I’ve never really stopped to think about how long the airline had to wait for that plane. But Boeing’s delays remind me that even the simplest travel plans depend on airlines getting their aircraft on time.
Related: New Boeing MAX 10 with special safety upgrade approved to fly travelers
Suppliers are adding to the pressure. Morgan Stanley notes that Boeing’s contracts don’t always allow it to pass rising supply-chain costs on to customers, putting additional strain on margins across its commercial and defense businesses.
Meanwhile, tighter FAA oversight following past safety incidents limits how quickly Boeing can ramp up production.
For airlines and passengers, I think that likely means new planes arrive later. The bank is encouraged by the 737-7 and 737-10 certifications and expects Boeing to reach its target production rates.
There are some bright spots. Boeing’s defense and services businesses are becoming more profitable, supported by a $14.7 billion, seven-year PAC-3 missile seeker contract and its F/A-XX fighter program.
Cash margins on the 737 and 787 are also improving. Still, Boeing’s Q3 report shows it’s carrying $45.9 billion in total consolidated debt accumulated during the 737 MAX crisis, the pandemic, and years of rising supplier costs.
Bloomberg / Getty Images
Morgan Stanley sees balanced risk and a $195 target
Is this the bottom?
Morgan Stanley says investors keep asking, and it sees balanced risk. Today’s price already assumes Boeing hits the new targets. Upside would come from ramping faster than planned or winning better advance terms.
Downside risks include engine delays, slower factory throughput, or supplier issues. It also flags a possible new narrowbody program early next decade, which could further strain cash.
The $195 target applies 17x 2029 free cash flow of $12.56 a share, discounted a year to $11.42. That is about four turns below RTX and eight below GE but above Boeing’s own history of 10 to 15 times.
The bull case is $260 if production smooths out. The bear case is $135 if FAA approval delays and execution problems hit deliveries.
For investors, the question is how fast Boeing can turn orders into cash. The new guidance gives a clearer finish line, and Morgan Stanley’s view is that the stock already reflects it.
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