Boeing's Stock Is Crushing the Market in 2025. Can It Continue?

Boeing's stock is up 13.6% YTD, driven by improved operational execution under CEO Kelly Ortberg, specifically in ramping up 737 MAX production to 38 per month, improving margins at Boeing Defense, Space & Security (BDS), and keeping the 777X on track for a 2026 delivery; CFO Brian West confirmed FAA approval for expanded 777X flight testing and reaffirmed the 2026 delivery target, while Ortberg outlined plans to increase 737 MAX production further, contingent on FAA approval of quality at the 38-per-month rate.

Analysis

Boeing's stock has demonstrated notable strength, rising 13.6% year-to-date, a performance largely attributed to enhanced operational execution under CEO Kelly Ortberg, appointed in August of the preceding year. The company's current trajectory is framed as a self-help narrative, focusing on three critical areas targeted for improvement in 2025: ramping up 737 MAX production to an initial 38 aircraft per month, enhancing profit margins within the Boeing Defense, Space & Security (BDS) division, particularly on challenging fixed-price contracts, and maintaining the 777X program's schedule for its first delivery in 2026. Current indications suggest Boeing is making tangible progress on these fronts. CFO Brian West confirmed FAA approval for expanded 777X flight testing and reaffirmed the 2026 first delivery target to Lufthansa, with key customer Emirates also expecting delivery by end-2026. West also stated the company is on track to achieve the 38-per-month 737 MAX production rate, with Ortberg detailing subsequent plans to increase this to 42 per month, followed by incremental increases of five, each requiring at least six months and contingent upon FAA approval of quality standards. Within BDS, which constitutes 60% core defense (mid- to high-single-digit profit margins) and 25% fighter/satellite programs (favorable margin trends), the key challenge lies in the 15% attributed to fixed-price programs. Here, Ortberg reported achieving 'stability' in estimated-at-completion (EAC) forecasts in the recent quarter, with an ongoing focus to improve EAC and cost controls, alongside progress on milestones for the T-7 trainer and the MQ-25 drone, slated for testing in 2026. While the near-to-medium term outlook appears positive contingent on continued execution, significant long-term challenges remain regarding funding next-generation aircraft, debt reduction, and capital returns to shareholders.

Key Decisions for Investors

• Investors should closely monitor Boeing's ability to meet its stated 737 MAX production target of 38 aircraft per month in the coming months and secure FAA approval for subsequent rate increases, as this is a key driver of the current positive narrative.
• The sustained improvement of profit margins within the Boeing Defense, Space & Security (BDS) division, particularly the achievement of better estimated-at-completion (EAC) outcomes on fixed-price contracts, is a critical factor to watch.
• While acknowledging the positive near-term execution, investors should weigh this against the substantial long-term capital requirements for developing future aircraft platforms and managing existing debt obligations.