David Hay — Friday POW!: Boeing (BA) — a turnaround by the numbers
"Beneath the headlines is a turnaround that is already working" — a $682B record backlog, FCF inflecting positive, and half of a duopoly with no third competitor at scale.
One-line take: This week's POW! is Boeing (BA) at ~$210, a contrarian turnaround the headlines still obscure. The thesis is financial, not sentimental: a $682B record backlog (all three segments at records; 1,173 net commercial orders), Q4 2025 revenue $23.9B (highest since 2018, +57% YoY), and — the key inflection — FCF turned positive at $375M after years of cash burn, with management on track for $1–3B in 2026, a Bloomberg-consensus $6.7B in 2027 and a $10B longer-term target. New CEO Kelly Ortberg (the post also says "Robert Ortberg") has cleaned up the balance sheet, restored delivery cadence (February deliveries the highest since 2017) and mended fences with the FAA. The moat: a Boeing/Airbus duopoly with no third option at scale, so cancelled orders just get redistributed down the same waiting list. Consensus PT ~$246 (~15%); a definitive break of $260 opens $300. Caveat — the Iran war pressures airlines, so start small or wait. (Idea sourced from new contributor Dan Bustamante.)
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| BA | Boeing | QT · SA · STK · FA | Positive | Pick of the Week — a turnaround "already working" the bearish headlines mask. $682B record backlog (all 3 segments at records), Q4 revenue $23.9B (highest since 2018, +57% YoY), and FCF inflected positive at $375M (CFO Jesus Malave) after years of burn — on track for $1–3B FCF in 2026, $6.7B in 2027 (consensus), $10B long-term. New CEO Ortberg cleaned up the balance sheet (post the ~$25B equity / $35B bond raises), lifted quality control, fixed FAA relations; Feb deliveries the highest since 2017. Half of an Airbus/Boeing duopoly — no third option at scale, so cancelled orders redistribute (China's came back as a ~500-jet deal). ~$210 vs consensus PT ~$246 (~15%); broke 2-yr resistance, a clean break of $260 opens $300. Caveat: the Iran war could pressure airline orders — start small or hold off. Idea from contributor Dan Bustamante. | read |
References only (not picks): Airbus (Euronext: AIR / OTC ADR EADSY) — the sole other large-jetliner maker, the other half of the duopoly; and Embraer (NYSE ADR ERJ) — Brazil's regional-jet maker at a "minuscule 2–3%" global share, cited as why there is no third competitor at scale. Other passing names: Southwest / Lufthansa (carriers on the order book), Microsoft, Amazon, Costco (Seattle-history color), Value Line (the financials source). The post's bottom Buy List and Trims & Holds render as images — tickers not text-readable — so david-hay/portfolio.json is unchanged.
2. Talking points
The setup — five years under a cloud of bad headlines
- Production failures, management turnover, labor strikes, a core-machine problem: "their situation was as bad as it sounds." The instinctive negative reaction the name triggers is "precisely the opportunity."
The reveal — Boeing, with a CEO quietly doing the work
- CEO Kelly Ortberg "has quietly done what turnaround CEOs are supposed to do: stabilize operations, restore delivery cadence, and let the financial results begin to speak." The market hasn't fully listened; at ~$214 (off the $254 January high) "we think it should."
"The Lazy B" — why Haymaker never recommended it before
- An over-reliance on financial engineering (buybacks) over aerospace engineering, exposed by Covid, forced ~$25B of new equity (at far lower prices than the buybacks) and $35B of new bonds, leveraging a once-pristine balance sheet. "Team Haymaker has never once recommended BA's stock" — a good omission, since it remains below the 2017 high.
The new contributor — Dan Bustamante
- Ace stock-picker Dan Bustamante (introduced last week) "has convinced us BA's fortunes are on the mend… and in a big way," and will share favorite ideas and opine on Haymaker portfolio inclusions.
What the new CEO actually fixed
- Cleaned up the balance sheet, elevated the stature of the (real) engineers, vastly improved quality control, mended fences with the FAA. "The fact that it has only one viable competitor is another unique and valuable attribute."
The one caution — the Iran war
- The war "is not likely to end in the next couple of days or weeks"; the longer it rages, the more pressure on airlines, who could cancel some of the hundreds of billions in orders. If you're negative on the Middle East, "either start with a small position or hold off altogether."
The bull case — a turnaround by the numbers
- $682B total backlog, all three segments at records: Commercial Airplanes the bulk (1,173 net orders), Defense/Space/Security $85B, Global Services $30B. "Nearly $700B of it locked in."
- Q4 2025 revenue $23.9B — highest quarterly total since 2018, +57% YoY. FCF positive at $375M: small for Boeing's size but "it represents an inflection" after years of negative cash flow. February deliveries the highest since 2017.
The duopoly nobody talks about
- If you're a major carrier needing aircraft, where do you go besides Boeing? "Airbus. That's it." No third option at scale, no certified Chinese product; Embraer is 2–3% (mostly regional jets). When sentiment sours and orders pause, they redistribute down the same waiting list or come back — as China's did with a potential 500-jet deal last week.
Valuation — headlines vs the backlog
- ~$214 is a discount to the January highs and to the business trajectory; consensus PT ~$246 (~15%), set before the latest delivery data. Enterprise-level, the heavy debt means the P/E should expand as FCF turns positive and the balance sheet repairs. "The current price reflects the headlines. The backlog reflects the business."
Technicals — a base near the 50% retrace and the 200-day
- Range-bound ~$140–$250 for five years; the breakout began last April and accelerated into the January earnings, then pulled back. Shares broke 2-year resistance — the big event is a definitive move through $260, after which $300 is "reasonably attainable."
- The pullback retraced just over 50% of the Nov-low-to-Jan-high move (a Fibonacci base) and is re-testing the 200-day MA (first crossed in over a year post-earnings). A stabilization here sets up $250+ over 2–3 quarters as FCF confirms, then $300.
Bottom line — where perception and reality diverge
- Buying all three: a turnaround with $682B locked in, a duopoly franchise at a discount to its trajectory, and a long-awaited FCF inflection. Boeing "will continue to generate negative headlines" (the 737 wiring issue this week; a possible SPEEA strike), "but the question is not whether Boeing is a perfect company. It demonstrably isn't" — it's whether the turnaround, the backlog and the moat are real. "On all three counts, the answer is yes."
3. In plain English
BA — Boeing Positive
Boeing makes large passenger jets. For five years it has been buried under bad news — quality scandals, strikes, two crashes years ago, and a balance sheet wrecked by years of burning cash (it had to raise ~$25B of stock and $35B of debt just to survive). So most investors flinch at the name. Haymaker's argument is that the flinch is the opportunity, because the actual numbers have quietly turned. The company has a record $682B order book (roughly $700B of future sales already signed), its latest quarter was its biggest revenue quarter since 2018, and — the part that matters most — it just generated positive "free cash flow" (cash left over after running and investing in the business) for the first time in years, with management guiding to far more in 2026 and 2027.
The other half of the case is the moat. There are only two companies on earth that build big jets at scale: Boeing and Europe's Airbus. An airline that needs planes has nowhere else to go (Brazil's Embraer only makes small regional jets), so even when bad headlines scare customers off, the orders don't vanish — they get re-shuffled to others on the same multi-year waiting list, or come back later (China just signaled a ~500-jet deal). At ~$210 the stock trades below where the recovering business should value it; Wall Street's average target is ~$246, and a clean break above $260 could open a path to $300. The one big risk Haymaker flags is the Iran war — a long conflict could pressure airlines into cancelling orders — so it suggests starting with a small position or waiting. This idea came from Haymaker's new contributor, hedge-fund manager Dan Bustamante.
Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.