Analysts See a 32% Upside in Boeing. Here's What Has to Go Right.

Given the stock's recent lackluster performance, investors clearly don't have much faith in Boeing (NYSE: BA) right now. But the analyst community isn't dissuaded. Most of them still consider the aircraft maker's stock a strong buy, with a consensus price target of $275.30. That's more than 32% above the stock's current price.

Even most analysts would likely agree, however, that this company's reputation has been more than a little tainted of late, leaving its stock inordinately vulnerable to even the slightest hint of trouble.

To this end, here are four things that must happen if Boeing shares are going to have any shot at reaching that target anytime soon.

Image source: Getty Images.

1. Boeing's part in the Artemis' mission(s) to the moon must work flawlessly

A bunch of different aerospace companies are supplying components for the craft that will take mankind back to the moon for the first time since 1972. Boeing's part is the 212-foot rocket itself, which is arguably the most critical and highest-profile piece of the puzzle. Although space exploration is only a tiny part of the company's total business, failure on this front could easily rekindle worries that Boeing's design and fabrication capabilities have become unreliable.

2. Boeing's order backlog must continue growing

While orders for future deliveries of Boeing-made aircraft understandably started slumping in 2019 after a couple of tragic crashes of its then-new 737 MAX passenger jets (followed by the economic and travel disruption stemming from the COVID-19 pandemic), many are surprised to learn that the company's order backlog began growing again in 2022. Indeed, despite plenty of pessimistic rhetoric of late, this backlog reached another new record as of the end of last year.

Data source: Boeing Co. Chart by author.

Orders aren't outright guaranteed business -- airlines can and do cancel their plans to purchase aircraft. Boeing's backlog has been a pretty reliable indication of the company's revenue trajectory, though. If it's rising, investors can feel reasonably confident about the future.

3. Profit margins must continue widening

Obviously, all investment-worthy companies should grow their bottom lines over time; Boeing is no exception. Doing so will be monumentally important for this particular company, though, as it will indicate that it's restored internal operating efficiency that's been missing for some time. As an example, not building its 737 MAX jets in their intended construction sequence is adding to their total production cost.

Data by YCharts.

To its credit, it's been improving on the margin front. It just needs to continue getting better, keeping costs like interest payments on its $52.6 billion in long-term debt to a minimum, or getting its defense and space unit out of the red and back into the black.

4. Critical certifications must get approved

Finally, while the company makes a number of passenger jets for a range of different purposes, two of its newer planes must be certified in the foreseeable future for the company to compete with specific aircraft made by rival Airbus (OTC: EADSY). That's the 737 MAX 10, which could be certified before the end of this year, and the 777X widebody, which could be certified and begin commercial deliveries sometime in 2027.

Boeing could certainly survive delays in these certifications. It wouldn't thrive, however. Indeed, the aforementioned widening of profit margins largely hinges on being able to manufacture both of these aircraft en masse.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.