In This Article:
Key Points
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Boeing is seeking certification of its 737 MAX 7 and 737 MAX 10 models.
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The company plans to increase 737 MAX production rates in a few months, then increase them again next year.
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Boeing's plans imply near-term revenue growth of as much as 24% from its most popular product.
Boeing (NYSE: BA) shares soared Thursday, up 3.4% through 11:30 a.m. ET -- not just because of today's tariffs news, but because of a pair of positive news reports from Reuters.
Last night, Reuters reported that Boeing "expects to finish certification of its best-selling 737 MAX family," specifically the 737 MAX 7 and 737 MAX 10 models, "by the end of the year." Boeing has orders for 1,200 MAX 10 airplanes and 332 MAX 7s awaiting fulfillment, worth tens of billions of dollars to the aerospace giant at list prices.
Separately, this morning, the news agency reported that Boeing plans to accelerate production of all 737 MAX models, from 38 airplanes per month currently to 42 later this year -- then to 47 planes per month by early 2026.
Boeing's biggest news
So, yes, Boeing is probably benefiting a bit today from positive news on a court ruling lifting President Donald Trump's "tariffs on everyone." And there is a tariff aspect to this story if the trade war ends and retaliatory tariffs on Boeing planes go with it.
But the biggest news today is specific to Boeing itself. The two production rate increases are planned to total about a 24% increase in plane production and a roughly 24% boost to revenue and cash flowing into the aerospace giant -- granted, just from the 737 production line, but the 737 is Boeing's most popular product -- probably happening within a year from now.
Is Boeing stock a buy?
Very roughly, a 24% boost to Boeing's $66.5 billion in annual revenue for 2024 might put the company back at 2012 levels, when sales were $82 billion per year and earnings were $3.9 billion. That would be better than Boeing's current situation, with sales still depressed and earnings negative.
However, it would still mean a price-to-earnings ratio of 39 times earnings for Boeing stock -- and that's assuming Boeing even succeeds in ramping production rates as it hopes to, which isn't certain. Sorry to say, that's too much to pay for Boeing stock, and in my opinion, at least, Boeing stock remains a sell.
Should you invest $1,000 in Boeing right now?
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