Boeing Q1 Preview: Growth Fails to Mask Losses, Cash Flow in Focus

TradingKey - Boeing ( BA) is scheduled to release its first-quarter 2026 financial results before the market opens on Wednesday. While the market expects revenue to grow by more than 12% year-over-year, the company is still projected to report a loss due to the ongoing cash burn from the 777X program and a drag from the defense business. The market focus is on whether strong delivery performance can translate into the $1 billion to $3 billion in free cash flow promised by management.

Analysts expect Boeing's first-quarter revenue to range between approximately $21.9 billion and $22.1 billion, a 12% to 13% increase year-over-year. The adjusted loss per share is estimated at $0.68 to $0.69, wider than the $0.49 loss reported in the same period last year.

2025 Performance Review

Full-year 2025 revenue reached $89.5 billion, the highest since 2018, while net income of $2.2 billion ended a six-year losing streak. However, the core earnings per share of $1.19 included a one-time gain of approximately $11.83 from the sale of the digital aviation solutions business. Excluding asset sales, core business profitability has yet to show substantive improvement.

Can Growth in Commercial Aircraft Deliveries Translate into Cash Inflows?

Boeing delivered 143 commercial aircraft in the first quarter, surpassing Airbus's 114. Of these, 114 were 737 MAX deliveries, accounting for approximately 80%; however, only 46 aircraft were delivered in March. Roughly 25 737 MAX aircraft required repairs due to damaged wiring, and about 10 deliveries were forced to be deferred to the second quarter, signaling a significant slowdown in the delivery pace.

Management plans to reach a monthly production rate of 47 for the 737 MAX by mid-year and 10 for the 787 by year-end, with an annual delivery target of approximately 500 737s. CFO Jay Malave warned of short-term supply chain uncertainties during a March conference and reiterated the full-year delivery goals.

737 MAX Certification Progress and 777X Timeline Update

On April 22, the FAA confirmed that the Boeing 737 MAX 7 and MAX 10 models are expected to receive certification by 2026, with the process currently in the final review stage. If certification for both models is finalized within the target year, it will clear delivery hurdles for the 737 series.

Certification for the 777X is progressing even more slowly. Although the first production 777X completed its maiden flight in April, Boeing still targets 2026 for certification and 2027 for initial deliveries. The project is approximately six years behind schedule and has incurred over $15 billion in cumulative development costs; certification delays will directly impact the trajectory for cash flow improvement.

Full-year free cash flow guidance

Management noted that full-year free cash flow for 2026 is projected to be between $1 billion and $3 billion; the CFO explained that after excluding temporary factors, the implied cash flow is approximately in the high-single-digit billions of dollars. These temporary factors primarily include delays in 777X certification, compensation for customer delivery delays, losses on defense contracts, and increased capital expenditures.

During the January earnings call, the CFO stated that inventory spending for the 777X program will be approximately $3.5 billion in 2025, with defense contract losses at roughly $500 million per quarter. Management aims to complete 777X certification within the year, at which point cash burn is expected to reverse and defense contracts will be renegotiated, narrowing losses accordingly.

However, the 777X has been delayed for six years, and defense contracts continue to post losses. Investors are questioning whether these "temporary factors" might evolve into a structural drag.

Fitch Ratings predicts that Boeing's free cash flow will reach several billion dollars in 2026, with total debt remaining below $50 billion and an EBITDA leverage ratio under 4x. If 777X certification is delayed or defense losses widen, the cash flow guidance may face downside risks.

Institutional Views

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According to data from various sources including MarketWatch and FactSet, 18 out of 29 analysts rate the stock as "Buy," 4 as "Overweight," 4 as "Hold," and 1 as "Underweight." The consensus rating is "Overweight," with an average price target of approximately $267.46, implying a 19.73% upside from the current price of $219.16.

Optimists such as Jefferies, Bernstein, and Tigress argue that backlogs and potential orders for 500 MAX aircraft from China serve as primary catalysts, while the high-margin aftermarket provides steady cash flow. Jefferies has set a price target of $295, and Bernstein has named Boeing its top aerospace pick for 2026 with a $298 price target.

Skeptics like Citi are concerned about the pace of earnings recovery. In early April, Citi lowered its price target from $290 to $256 while maintaining its "Buy" rating, reflecting a market reassessment of the speed of cash flow improvement.

FactSet data indicates that the median analyst estimate for 2027 earnings per share is $4.85, and $8.11 for 2028. While long-term expectations are optimistic, short-term execution risks remain.

Optimists expect the backlog to be released and aftermarket cash flow to increase, while skeptics are concerned that the 777X will continue to burn cash and that defense contracts will incur losses.

What is the outlook?

If first-quarter free cash flow outperforms expectations and full-year guidance remains unchanged, the stock price could see a recovery. Should delivery performance falter or 777X certification be delayed again, cash flow guidance will be lowered, and the stock price will come under pressure.

Investors should monitor leading indicators, including whether monthly 737 production can steadily rise to 47 aircraft, news regarding 777X certification, and fluctuations in defense contract losses. While the backlog provides long-term revenue visibility, CEO Ortberg's ability to stabilize the supply chain and improve delivery efficiency will be the key factor in determining whether Boeing can deliver on its cash flow commitments.