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Boeing Stock Forecast: Union Deal Lifts BA as FAA Review Tests Recovery

Source Tradingkey

Boeing (NYSE: BA) rebounded sharply during the past week to recoup only a fraction of the prior week’s selloff. On Tuesday, BA closed at $192.28, up 3.35% from Monday. Last week’s low of $184.39 came on Friday, when Boeing’s engineers and technical workers voted to approve a new contract and avert the threat of an imminent strike. Also last week, the FAA said it was evaluating a software issue on the 737 MAX that is delaying the certification of the MAX 10.

Boeing remains unusually dependent on execution rather than demand to move its share price. The defense and aerospace company is signing lucrative contracts, but the real “wild cards” are profitability, timing of certifications and cash flow. Boeing’s October 27th earnings release will likely need to show increased deliveries, improved profitability and better free cash flow.

Union Deal Removes an Immediate Disruption Risk

Boeing’s largest white-collar union, the Society of Professional Engineering Employees in Aerospace (SPEEA) approved a new contract on October 1. Reuters reported that 68% of the professional bargaining unit, and 53% of the technical unit voted to approve the contract. The contract guarantees a 10% wage increase on ratification, as well as raises of 4% annually.

The new contract removes a significant risk to Boeing’s operations at a delicate point during the recovery. A strike may have disrupted work on the certification of the 737 MAX 10 and 777-9, and complicated the production system changes. It may have even disrupted engineering support for several programs. The increased labor costs means Boeing must find ways to increase employee productivity and improve delivery economics to maintain profits.

FAA Review Keeps MAX 10 Certification in Focus

The FAA is set to hold a Corrective Action Review Board on October 2 to examine the software issue that affects the 737 MAX. This problem can limit access to automated flight guidance in certain go-around scenarios and has led to additional review of the MAX 10 certification pathway. Secretary of Transportation, Pete Buttigieg has stated that there is no requirement to ground the MAX fleet at this time and that Boeing is working on a permanent software fix.

The results of the review are pending and supportive comments to the board usually mean a less stringent impact to the MAX 10 certification and no fleet wide disruption; however they do not outline a timeline to the certification of the MAX 10. It is likely that a resolved review would advance the case for the MAX 10 recovery while additional requests or a lengthy certification process would push back deliveries and cash collections for the aircraft.

Navy Fighter Win Strengthens the Defense Pipeline

Boeing was awarded the design and build contract for the F/A-XX by the U.S. Navy on September 29. According to Boeing, the contract is worth several billion dollars, while Reuters reported that the award is approximately $20 billion. The F/A-XX contract is to replace the F/A-18 Super Hornet, which is currently used by the Navy. Boeing won the contract for the F-47 program by the U.S. Air Force in 2025, which will be built in St. Louis.

Boeing has strengthened its long-term business for the St. Louis defense operation and has two major next-generation fighter contracts with the win. While strategically the award is positive, there are a multitude of variables, such as development cost and contract structure, that will have a significant impact on the ultimate worth for shareholders.

Q2 Showed Better Volume but Fragile Margins

Boeing recorded a second quarter 2026 revenue of $24.56 billion, which represents a 8% increase year on year. This was attributed to 171 commercial aircraft deliveries. GAAP loss per share was $0.67, while core loss per share was $0.76. Operating cash flow was $1.364 billion and non-GAAP free cash flow was $631 million. At the end of the second quarter, the company's total backlog was a record $715 billion.

The segment details illustrate an incomplete recovery. The Commercial Airplanes unit recorded $11.75 billion in revenue, but had an operating margin of -2.7%. The Defense, Space & Security unit recorded $7.48 billion in revenue, also with an operating margin of -0.2%. Global Services, on the other hand, recorded $3.23 billion in revenue with an operating margin of 18.1%.

Of these metrics, I focus more on the operating margin mix. An improved unit and total backlog provided Boeing with better demand visibility. However, the revenue and backlog remain most valuable to shareholders if these contracts are ultimately executed at a profit.

Cash Flow Recovery Is Taking Longer Than Hoped

Boeing’s outlook for recovery of cash flow has become more measured. During the Morgan Stanley conference on September 16, management mentioned that they expected cash flow between $1 billion to $3 billion in 2026. In contrast, Reuters stated that management indicated that they expected cash flow of approximately $2 billion in 2026, with more uncertainty around the production rate. The slower ramp in both 737 and 787 production rates is a major contributing factor.

On a positive note, Boeing still had roughly $20 billion in cash and cash equivalents at the end of June. However, Boeing still has a net debt position of approximately $45.9 billion, with negative free cash flow for the first half of 2021. Continuous free cash flow in positive territory would help fund the ongoing reduction of debt, as well as new programs without cash flow concerns.

The October 27 Earnings Report Is the Next Big Test

On October 27, Boeing will release its third quarter financial results and hold a conference call at 10:30 a.m. ET to discuss the outlook. Management's outlook will be of greatest interest. The most critical numbers will be commercial aircraft deliveries, the margin for the Commercial Airplanes segment, free cash flow, and any updates on the certification process. Investors will also want to know if management still expects the company to generate about $2 billion of free cash flow in 2026.

A more bullish case would be stronger deliveries and narrowing commercial segment losses, with an improvement in free cash flow and cash conversion as well. Conversely, improvements in revenue but deterioration in operating margins and free cash flow would be less compelling. A more sustainable recovery in the stock will require management to provide a combination of operating and financial improvements.

Boeing Technical Analysis: BA Rebounds From $188.49 as Trendline Resistance Nears

Boeing closed at $192.28 after the buying pressure defended $188.49. This pushed the price up to the resistance trendline. I think the strength of the bounce is constructive; however, Boeing is still under the two major moving averages and is still in a sequence of lower highs. The near-term bounce in the price is constructive; however, it does not confirm a trend reversal.

Boeing Stock Price Chart - Source: Tradingview

Boeing Stock Price Chart - Source: Tradingview

RSI is at 44, and is above its signal line of 36. This signals that a further short-term up move is possible. However, the moving average is still below the 50 level, indicating that the trend is still down. For the longer-term bullish outlook to be valid, the price needs to cross the trendline resistance and the moving average convergence/divergence (MACD) needs to cross above the center line.

The near-term price resistance is between $193.29 and $196.22. The downward trendline and the horizontal resistance come together at this price. A 4-hour closing price above $196.22 would test the moving average convergence/divergence (MACD) zone at $201.65 to $204.53. This is followed by the resistance at $208.31. Support is at $188.49. A close below this level would open the downside to $178.74 and then to $171.20.

I think the overall bearish outlook remains valid until $196.22 is broken to the upside. A close above this level would improve the overall picture, and a close below $188.49 would keep the bearish outlook in effect.

Why is Boeing stock in focus now?

Boeing is in focus for a few reasons. First, there is less strike threat with the ratification of the SPEEA contract. Second, the Navy's decision on the F/A-XX award strengthens the defense backlog. Last, the FAA’s review of the BOEING 737 MAX certification on October 2 keeps the risk of MAX certification in the spotlight. Boeing will report earnings on October 27. This report should show better margins and cash flow with the increased deliveries in the second quarter.

What level confirms a stronger BA recovery?

A bullish reversal above $196.22 should be the first of a few signs that the rebound is becoming stronger. This would then put the levels of $201.65 to $204.53 in focus. A move below $188.49 would still maintain the rebound and put the levels of $178.74 in focus.

Bottom Line

A stronger labor agreement and the win of the Navy fighter award improved the outlook on BA. Execution of the regulations and free cash flow remain the largest drivers for BA. The second quarter showed better deliveries and free cash flow, but the Commercial Airplanes division remained a drain on cash and the 2026 outlook remains uncertain.

From a technical perspective, the upside is limited at $196.22 and the downside is limited at $188.49. A breakout above $196.22 would bring a better structure to the trade. Conversely, a break below $188.49 would put the levels of $178.74 in focus.

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