Key Takeaways
- Boeing’s engineering union, SPEEA, recommended on September 22 that members accept the company’s latest contract offer, removing a strike risk CEO Kelly Ortberg called his “1, 2, 3, 4, 5 priority” on the July earnings call, one that would have shut down 777X certification testing.
- Six days before that recommendation, Boeing disclosed at the September 16 Morgan Stanley Laguna conference that 737 production at 47 planes a month is “not yet stable” because of a wing-shop flow problem, pushing the next rate break to 52 a month into 2027.
- Free cash flow swung from a $1.45 billion outflow in the March 2026 quarter to a $631 million inflow in June, continuing a volatile pattern that has run since a $4.1 billion outflow in late 2024.
- Street analysts have raised their average 12-month price target 22% since mid-2025 to $273.69, now 37% above Boeing’s $199.93 close, even as the stock itself has drifted lower over the same stretch.
Boeing Stock Clears Its Biggest Labor Overhang
On September 22, SPEEA, the union representing Boeing’s Puget Sound engineers and technical employees, said its bargaining councils were recommending that members accept the company’s latest contract offer, with both councils clearing the required 60% supermajority to make that recommendation. Members still have to vote before the current contract expires on October 6, but the recommendation itself matters, because Boeing had been treating the alternative as a genuine threat to its 2026 recovery.
Meanwhile, on the Q2 earnings call last July 28, Ortberg did not hedge about what a strike would mean. “Essentially the 777 certification program shuts down until we get the engineers back and it will have ripple effect even into our production,” he told analysts, adding that Boeing had built a contingency plan aimed at sustaining 737 output but conceding the company “probably will not be able to sustain the rates of 737 in a strike.” That is a meaningful admission from a company still rebuilding regulatory trust with the FAA. A work stoppage now, with 777X certification testing more than halfway complete and the 737 MAX 10 certification pending, would have reintroduced exactly the kind of schedule risk Boeing has spent two years trying to eliminate.
The Wing Bottleneck Behind Boeing’s Delayed Rate Ramp
The SPEEA relief lands against a less reassuring backdrop. At the Laguna conference, both Ortberg and CFO Jay Malave were unusually direct about where the 737 program actually stands. “We’re now driving at 47 a month, but we are not stable yet at 47 a month,” Ortberg said, adding that stabilization has “probably taken us a little bit longer than what I had anticipated.” The constraint, he said, sits specifically in Renton’s wing production shop, where Boeing has “just not seen the flow improvements that we expected in the time frame.”
That single sentence carries real weight for the cash flow story. Boeing’s plan to reach 52 airplanes a month depends on two things happening together, the Renton wing shop stabilizing, and the new North Line in Everett becoming certified and producing. Ortberg confirmed that combination “will happen next year,” a real slip from the cadence Boeing had been describing through the first half of 2026, when 52 a month still read as an achievable near-term target. Malave separately laid out a multibillion dollar working capital opportunity tied to excess inventory, stored MAX 7s and 10s awaiting certification, and deferred production balances, but he was equally direct that unwinding it “has to be done in a way… consistent with our rate increase plans,” meaning Boeing cannot harvest that cash until production actually stabilizes.
What Boeing’s Cash Flow and Street Targets Actually Show
Boeing’s quarterly free cash flow data backs up the “not yet stable” framing. After outflows of $1.96 billion, $4.1 billion, $2.29 billion, and $200 million across the four quarters spanning late 2024 through mid-2025, free cash flow turned modestly positive in the back half of 2025 at $238 million and $375 million, before swinging back to a $1.45 billion outflow in the March 2026 quarter and then rebounding to $631 million in June. That is not a smooth ramp. It is a business still absorbing seasonal advance payments, delivery timing, and one-time items like the $700 million Department of Justice payment management flagged for the third quarter, on top of the underlying production issues.
Boeing’s normalized earnings are close enough to breakeven that its NTM price-to-earnings multiple is close to meaningless as a valuation tool right now, swinging from a mean of 434x to a low of negative 2,081x over the past year and sitting at 171x today. That volatility is itself informative, investors cannot price Boeing off current earnings, so the entire investment case rests on the cash flow trajectory management is promising for 2027 and beyond.
The Street’s own targets have not stood still. The mean 12-month price target has climbed from $224.12 in June 2025 to $273.69 as of September 23, a 22% increase, even as Boeing’s actual share price drifted lower over that period, from $209.53 to $199.93 now, down about 5%. The gap between target and price has widened from 107% to 137% of the close, and coverage remains lopsidedly bullish, with 18 buy ratings and 5 outperforms against just 4 holds and 1 underperform. Notably, the mean target held up even after Jefferies cut its own target to $265 from $295 the same week as the SPEEA news, which suggests other analysts are still raising targets faster than the skeptics are cutting them.
The Real Test Is Still the Wing Shop, Not the Union
Removing the SPEEA risk takes one binary, headline-grabbing threat off the table, and it is a genuine positive, a strike would have compounded an already fragile certification and production schedule. But it does not change the mechanism that actually determines whether Boeing generates the cash flow analysts are underwriting. That mechanism is production stability, and specifically whether the Renton wing shop and the new Everett North Line can deliver the flow improvements Boeing has now twice said arrived later than planned.
Malave has reaffirmed 2026 guidance of $1 billion to $3 billion in free cash flow, centered near $2 billion, and described that consistency as itself “symbolic of improving stability.” But he also called 2027 a “transitionary period” still burdened by pricing penalties and excess advances, well short of the $10 billion run rate Boeing has held out since 2022. Investors should treat the next two data points as the real test, whether Boeing confirms 47-a-month stability and a firm 2027 timeline for rate 52 on the third-quarter call expected in late October, and whether SPEEA membership actually ratifies the recommended contract before October 6. A rejected contract would put the labor risk right back on the table at the same moment the wing shop is still catching up.
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Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
