On Monday, US aerospace giant Boeing (BA.US) shares surged over 8%, just after the only Wall Street firm with a bearish outlook on the stock—BNP Paribas—completely abandoned its negative stance, upgrading the stock by two full notches. The firm stated that Boeing shares have a clear path to more than double by 2030.
BNP Paribas analyst Matthew Akers raised Boeing's rating from "underperform" to "outperform." He noted that market forecasts for the company's free cash flow have been "excessively" downgraded, adding that as the sole manufacturer of Boeing aircraft completes certification for several key models and reduces debt, the risk level over the next year will significantly decline.
Monday's roughly 8% rally in Boeing on August 3 was primarily driven by a triple confluence of regulatory de-risking, a cash flow inflection point, and a reversal in sell-side expectations—not merely a market-wide rebound. The US Federal Aviation Administration's (FAA) formal certification of the 737 MAX 7, ending a nearly decade-long review, and authorization for Boeing to begin production of the model, opened a delivery path for approximately 282 existing orders. This also signaled to the market that the certification process between Boeing and regulators is normalizing, boosting the credibility of timely approvals for the MAX 10 and 777X.
In a research note to clients on Monday, Akers wrote: "The period of sustained uncertainty for Boeing in the post-COVID era has ended. This higher fundamental certainty is likely to eventually break the stock out of its $150 to $250 range, where it has been trapped since early 2020." He also outlined a bullish scenario where Boeing shares could reach $450 by the end of the decade. Akers not only raised the rating by two levels but also set a base price target of $300, the highest among analysts covering the stock. Baird analyst Peter Arment also set a $300 target for Boeing.
At the New York market close on Monday, Boeing shares were up 8.03% at $233.49. The FAA's announcement on Monday that it had approved the 737 MAX 7 ended a certification process that had dragged on for nearly a decade. Since the start of the year, Boeing's stock has gained about 4.2%, lagging behind the S&P 500's 10.6% rise.
As shown in the chart, Boeing shares have oscillated in the $150 to $250 range. BNP Paribas now projects the stock could soar to $450 by 2030. With this upgrade, over 80% of Wall Street analysts covering Boeing now recommend "buy" or "overweight," while the rest advise "hold."
Akers stated that over the next year, certifications for some MAX and 777 series aircraft will significantly enhance Boeing's operational stability. He also expects the company's net leverage ratio to return to near pre-pandemic historical normal levels within the next year. The analyst noted that the impact of non-recurring defense business expenses is also expected to diminish noticeably, reducing their long-term drag on cash flow and helping investors refocus on the accelerating commercial aircraft business. Consequently, Akers raised his 2027 free cash flow forecast for Boeing to $7 billion, above the average analyst estimate of $6.23 billion.
The analyst wrote: "As the main cash flow drags—R&D costs, customer compensation, and legacy defense project expenses—all fade, we expect free cash flow to reach about $16 billion by 2030." He added: "Based on the current free cash flow yield of industrial companies, and incorporating a discount relative to Boeing's historical average valuation, this implies a share price of around $450 by 2030—roughly double current levels—and a new all-time high for the first time since 2019."
The Monday rally, driven by regulatory de-risking, a cash flow inflection point, and a reversal in sell-side expectations, was epitomized by the FAA's formal certification of the 737 MAX 7, ending a decade-long review and authorizing production. The previous week's second-quarter earnings report provided a fundamental foundation for this revaluation. Boeing's revenue rose 8% year-over-year to $24.56 billion, commercial aircraft deliveries increased 14% to 171 units—the highest quarterly level since 2018—and operating cash flow improved from $227 million to $1.364 billion. Free cash flow turned positive from negative $200 million in the year-ago period to $631 million, and the order backlog reached a record $715 billion.
Although the earnings report showed an adjusted loss per share of $0.76, missing estimates, and included a $280 million charge for the "Air Force One" program, the commercial aircraft operating margin improved from negative 11.9% to negative 2.7%, and the defense business margin also improved from negative 2.9% to negative 0.2%. These data points generally indicate that increased deliveries, stable production, and cost improvements are gradually releasing operating leverage.
BNP Paribas's core bullish thesis is that market expectations for Boeing's future free cash flow have been overly downgraded. As 737 production ramps to 47 per month, and further toward 52-57, with MAX and 777 series certifications completing sequentially, and R&D spending, customer compensation, and legacy defense project costs declining, the analyst expects Boeing's 2027 free cash flow to reach $7 billion—above the market consensus of $6.23 billion—and potentially hit $16 billion by 2030. Valued at the free cash flow yield of industrial companies, this supports a share price path to around $450. In other words, the market is repricing Boeing from a "long-term cash burn and regulatory crisis company" to a "delivery recovery, deleveraging, and cash flow revival company."
A 7% drop in oil prices, falling Treasury yields, and an overall improvement in risk appetite acted as macro amplifiers for this rally, but not the core valuation pillars. Lower jet fuel costs could improve airline cash flows, reducing the risk of delayed deliveries and order cancellations, but whether Boeing can sustainably break out of its $150-$250 range over the past few years still depends on MAX 10 and 777X certifications, supply chain and engine deliveries, quality control as 737 production increases, and whether defense fixed-price projects can stop generating significant losses.
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