Shares of airplane manufacturer Boeing (BA +5.19%) jumped 10.2% on Tuesday as of 3:26 PM EDT.
The industrial giant's new Chief Financial Officer, Jay Malave, participated in the UBS Global Industrials and Transportation conference. At the conference, Malave presented an optimistic outlook regarding Boeing's profitability for 2026 and beyond, suggesting a more robust recovery than analysts had feared following Boeing's Q3 report.
NYSE: BA
Key Data Points
Single-digit billions in cash flow next year, with a path to $10 billion
At the conference today, Malave noted that he projects Boeing will transition from a $2 billion cash flow loss in 2025 to positive free cash flow in the "low single-digit billions" next year. Additionally, Malave also said this was despite a payment to the Department of Justice being moved from 2025 into 2026. So, despite the payment headwind next year, 2026 free cash flow is expected to remain in line with expectations.
Malave also went on to say that a $10 billion annualized free cash flow target is also very doable.
While Malave didn't unveil any cash flow numbers that hadn't previously been cited, investors had recently grown nervous following the company's third-quarter report, when management announced that the new 777X would be delayed until 2027. Therefore, to hear him confidently reiterate improved cash flow for next year, as well as the company's long-term target, was reassuring after the stock's recent sell-off.
Image source: Getty Images.
Boeing looks cheap if it hits targets
After today's leap, Boeing's market capitalization is around $156 billion, while its $30 billion in net debt brings the company's enterprise value is about $186 billion.
That means that if the company hits analysts' targets of around $2.2 billion in free cash next year, the stock is trading at roughly 71 times 2026 free cash flow. However, investors should keep in mind that as the company's production ramp-up gets underway, cash flow should rapidly improve. If Boeing hits its $10 billion target in 2027 or 2028, the stock is trading at less than 16 times that figure, with a manageable debt load.
While the market is certainly giving Boeing some credit for future improvement, the stock could still go higher if investors become more comfortable with the path to achieving the $10 billion figure. That may take time, but investors who believe in Boeing's new leadership and execution should continue to hold the stock.
