Boeing 737 deliveries seen rising in Q3

Bank of America projects Boeing (BA) will deliver approximately 118 737s and 26 787s in Q3, marking significant year-over-year and quarter-over-quarter increases driven by steady production. While this progress supports BofA's maintained Buy rating and $270 price target, ongoing rework challenges suggest a 737 rate-42 increase is unlikely in October, despite anticipated FAA approval later in Q4.

Analysis

According to a Bank of America analysis, Boeing is poised for a significant increase in aircraft deliveries for the third quarter, signaling strengthening operational performance. The firm projects total 737 deliveries will reach approximately 118 units, a notable rise from 104 in the second quarter and 92 in the prior-year period, driven by a stable production rate of 38 aircraft per month. Similarly, the 787 program is expected to show continued strength with a forecast of 26 deliveries in Q3, up from 24 in Q2 and just 14 in the same quarter last year. However, this positive momentum is tempered by a key operational challenge. Boeing's CEO has highlighted that the rework key performance indicator (KPI) remains a concern, which BofA believes makes a production ramp-up to a rate of 42 for the 737 unlikely in October. Despite this near-term delay, the bank anticipates FAA approval for the rate increase later in the fourth quarter, underpinning its maintained Buy rating and $270 price target on the stock.

Key Decisions for Investors

• The projected sequential and year-over-year growth in Q3 deliveries for both the 737 and 787 models offers a strong fundamental underpinning for a bullish thesis, supporting Bank of America's Buy rating.
• Investors should closely monitor communications regarding the 737 program's 'rework KPI', as persistent issues represent the primary bottleneck delaying the anticipated production rate increase to 42 per month and could impact future guidance.
• The expected FAA approval for a rate-42 production ramp-up later in Q4 represents a key potential catalyst, and its timing and confirmation should be watched as a critical milestone for the stock's performance.