Boeing's share value may potentially increase by 37%, as suggested by one analyst on Wall Street.
A recent analysis by a Jefferies expert assigned a 'buy' recommendation and set a $200 price point for Boeing (BA with a 0.96% decline) shares, suggesting that the concern over potential tariffs affecting China, being only 2% of Boeing's outstanding orders, may be overblown.
Interpreting the $200 goal
While the rationale is sound, the $200 value appears overly optimistic. This figure, providing a 37% increase from current prices, would position Boeing with a market cap of around $150 billion. The consensus among Wall Street analysts foresees Boeing producing $5.3 billion in free cash flow (FCF) in 2026 and holding $37 billion in net debt during the same period.
The $200 price specifies a price-to-FCF multiple of 28 in 2026.
Is Boeing stock worth $200?
If the company meets its objectives, a strong argument can be made in favor of Boeing being a worthwhile investment. A 28-fold valuation based on FCF in 2026 may seem expensive. A picture taken at that time may portray a company augmenting airplane production, thus boosting profit margins, and the defense sector continuing to increase earnings as it addresses problematic legacy contracts.
Meanwhile, with CEO Kelly Ortberg mentioning a backlog of about $500 billion on a recent earnings call, only Boeing's success in fulfilling and delivering these orders will decide its future.
However, there is significant risk associated with Boeing meeting its targets, as well as another consideration for the 2026 picture: the development of a new aircraft for the next stage of narrow-body aircraft.
The former CEO even stated that Boeing would not have a new plane ready before 2035, requiring years of financial investment. Thus, while imagining the 2026 snapshot, investors must also account for the capital demands connected with this new project.
It is particularly significant considering that Asia represents the fastest-growing aviation market, and China's Comac aircraft will likely become more competitive in the upcoming generation of narrow-body aircraft.
In light of the analyst's prediction, some investors might be tempted to invest a significant amount of money in Boeing, hoping to reap profits from its potential growth. However, considering the company's agreed-upon price-to-FCF multiple of 28 in 2026, one might question if this level of finance investment in Boeing stock is financially prudent.
As we look ahead to 2026, it's crucial for investors to weigh the potential gains of Boeing's success in fulfilling its orders and boosting profits against the substantial financial investments required for developing a new aircraft, which could impact Boeing's financial health and competitiveness in the rapidly growing Asian aviation market.
