Down 32% Last Year What Will 2025 Bring For Boeing Stock?

Boeing stock (NYSE: BA) had a tough 2024. BA stock lost about 32% over the year, underperforming the broader S&P 500 index, which gained 23% for the year. While other aerospace stocks have done well, with GE stock rising 65% and Airbus ADR up 5%, Boeing has itself to blame for the headwinds it faced last year. Boeing is often criticized for its broader move from an engineering-focused company to profit-driven, and compromising on quality control and oversight of its processes. We discuss more on this in the sections below. Boeing’s Q3’24 results were also a miss, weighing on its stock.

In this note, while we briefly touch upon the issues Boeing faced in 2024, we focus on the impact on BA stock and how could 2025 turn out. But, if you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

What Headwinds Did Boeing Face In 2024?

The first major issue for Boeing was in January last year, when a cabin side panel detached midair on Alaska Air (Boeing 737 Max 9) flight 1282. Following the incident, the Federal Aviation Administration (FAA) halted the production expansion plans for 737 Max aircraft. Later, in February, one of Boeing’s suppliers found a new problem with fuselages on several unfinished 737 Max planes. Boeing failed in various product audits conducted by the FAA on 737 Max airplanes. The fuselage is made by one of Boeing’s suppliers — Spirit AeroSystems. Boeing is currently in the process of acquiring Spirit AeroSystems in an $8.3 billion deal, including debt.

Boeing’s then CEO – Dave Calhoun – stepped down following the backlash after the above incidents, and Kelly Ortberg is now heading the company. Boeing’s biggest labor union decided to go on strike as they were unable to reach an agreement with the company. The strike started on September 13 and ended on November 4, when a new contract with a 38% rise in wages over the next four years was backed by the union. However, this strike likely cost Boeing over $5 billion and weighed on its production targets.

These headwinds resulted in many of the Wall Street analysts cutting their price targets for BA, citing the delay in achieving a higher production rate and likely cash flow issues.

On December 29, a South Korean air carrier – Jeju Air – crashed, killing 179 people. The pilot called the air traffic control informing about a bird strike before attempting to land. However, the landing gear failed to deploy, forcing the aircraft to make a belly landing. Overshooting the runway, it collided with the concrete wall at the end, resulting in a crash. South Korea is currently investigating the Boeing 737-800 jets. Boeing as well as its engine maker  – GE Aerospace – have joined the investigation.

What Does This Mean For BA Stock?

Owing to these developments, BA stock declined gradually from levels of $260 in early January last year to $170 now. Looking at a slightly longer term, the decrease in BA stock has been far from consistent, with annual returns being more volatile than the S&P 500. Returns for the stock were -6% in 2021, -5% in 2022, 37% in 2023, and -32% in 2024. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is much less volatile. While BA stock has seen lackluster growth over recent years, the Trefis High Quality Portfolio, with a collection of 30 stocks, has provided better returns with less risk versus the benchmark S&P 500 index over the last four-year period; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and ongoing inspections for Boeing, could BA face a similar situation as it did in 2021 and 2024 and underperform the S&P over the next 12 months — or will it see a recovery? We estimate Boeing’s Valuation to be $178 per share, slightly above its current levels of $170. Our forecast is based on 2.0x revenues for BA, aligning with the average value over the last five years. We expect 2025 sales to be around $85 billion for the company and a profit of $3.27 per share, compared to $77.8 billion in sales and $5.81 loss per share in 2023. The company is yet to report its full-year 2024 results.

What’s In Store For Boeing In 2025?

Hopefully, Boeing will see some positives in 2025. Firstly, it will complete the acquisition of Spirit AeroSystems. This will likely help the company address the quality issues and get on track for its 2026 production target of 50 airplanes a month. In fact, the investors will be optimistic about Boeing stock if it were to show signs of an improving production rate. The long-term demand is intact, with a backlog of over 5,000 airplanes. Just a few weeks back, Boeing signed an agreement to sell 200 airplanes to Pegasus Air.

Boeing’s investors will be wishfully thinking that the FAA may lift the production cap of 38 737 Max aircraft a month in 2025, but it seems unlikely. The FAA will have to be convinced that all the safety standards are met, and the company demonstrates an improvement in quality control. Note that currently Boeing is far away from reaching that 38 figure as well. While the FAA takes its time to review Boeing’s quality control, Boeing itself has to push the production targets to reach at least the 38 figure. The production numbers will be dismal for Q4, given the impact of the union strike. That said, with the strike behind us, and the company raising over $21 billion in Q4 last year, it will help it focus on achieving better production rates in 2025.

Notably, the company will likely continue to burn cash for its operations in the near term. Overall, we think 2025 will turn out to be a year where Boeing sets a strong path forward, focusing on quality control and improving efficiency. These measures will likely help it start a new cycle from 2026 where the production targets are higher, FAA likely lifting the cap, and the company returning to profitability.

While BA stock may have a better year, it is helpful to see how Boeing’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 1/6/2025
[2] Cumulative total returns since the end of 2016

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