Bank of America Maintains Buy on Boeing Despite Production Delays
Bank of America sees a buying opportunity in Boeing's stock slide, attributing recent volatility to expected production hiccups rather than structural failure.
Key points
- Boeing shares fell to $198.20 on September 18 after CEO Kelly Ortberg confirmed 737 production instability and 777X certification delays into 2027.
- Bank of America analyst Ronald Epstein maintained a Buy rating and $270 price target, arguing the market overreacted to expected turnaround setbacks.
- The analyst identified the pending SPEEA labor contract vote as the primary near-term risk, noting that union approval is essential for certification workflows.
Boeing shares dropped to $198.20 on September 18, marking a 4.83% decline over five trading days and a year-to-date loss of 12.98%. The sell-off followed CEO Kelly Ortberg’s remarks at the Morgan Stanley Laguna Conference, where he acknowledged continued instability in the 737 production ramp and confirmed that 777X certification testing will extend into 2027. While the market interpreted these updates as signs of further distress, Bank of America analysts view the price correction as an entry point for investors.
Boeing’s 737 line has yet to stabilize at the targeted rate of 47 jets per month, a delay attributed to in-house wing production issues despite a stable broader supply chain. Ortberg noted that only three deliverables remain before the 737 MAX 10 receives certification, a variant that accounts for roughly 30% of the 737 backlog. Meanwhile, the 777X remains approximately seven years past its original schedule, with ETOPS certification delayed by engine seal issues in the GE9X turbine, though GE Aerospace states upgraded parts began shipping in August.
Analyst Views Selloff As Overreaction
Ronald Epstein, an aerospace analyst at Bank of America, reiterated his Buy rating and $270 price target in a report shared via Yahoo Finance. Epstein described the 7% intraday drop in Boeing stock as "a bit dramatic," arguing that setbacks are inherent to a complex, regulated turnaround process. He emphasized that Boeing’s execution challenges are not new and that the company’s strategic direction remains sound despite the operational noise.
Epstein’s $270 target implies a potential 36% gain from the September 18 close. He noted that while the 777X delays are significant, the market’s focus on immediate production metrics may obscure the broader trajectory of the company’s recovery. The analyst’s stance reflects a long-term view that prioritizes the completion of the turnaround over short-term delivery slippages.
Labor Contract Represents Key Risk
A more critical near-term risk, according to Epstein, is the pending vote by the Society of Professional Engineering Employees in Aerospace (SPEEA). The union, representing approximately 17,000 engineers responsible for safety analysis and certification paperwork, must approve a tentative four-year agreement by October 6. A rejection could trigger a strike, halting the flow of aircraft through the certification pipeline and directly impacting revenue.
Despite these risks, Bank of America maintains a 2026 free cash flow forecast of $2.4 billion for Boeing. The firm believes that once the SPEEA contract is ratified, the path to stabilizing production and meeting airline delivery commitments will become clearer. This financial outlook underpins the bank’s conviction that the current share price undervalues the company’s long-term earning power.
