Boeing's Target Cut Puts Defense Cash Flow Back in Focus

RBC Capital lowered its Boeing price target to $235 from $265 while keeping an Outperform rating. The combination captures the company's current investment case: analysts still see recovery potential, but the timing and value of that recovery remain uncertain.

The immediate concern is defense. RBC expects solid third-quarter bookings but sees federal spending uncertainty beyond fiscal 2027 as a continuing headwind. Boeing's Defense, Space & Security business generated about $7.5 billion of second-quarter revenue, making it too large for investors to treat budget visibility as a side issue.

Commercial operations are improving. Boeing delivered 161 aircraft in the third quarter, including 124 737s and 22 787s. The company has also said its total backlog reached $715 billion at the end of the second quarter, with more than 6,200 commercial airplanes. That demand provides years of potential work, but backlog does not become cash until aircraft are built, certified and delivered.

Other analysts have raised similar questions. Bernstein and TD Cowen also reduced price targets while keeping positive ratings, according to the original report. The common thread is not weak demand. It is uncertainty about labor, certification, production discipline and free cash flow.

Boeing's defense segment adds a second execution problem. Even when contracts are funded, fixed-price development programs can produce charges if costs exceed assumptions. A higher defense budget would not automatically repair margins on troubled contracts.

The next earnings release should be judged on more than revenue. Investors need stable 737 production, delivery conversion, defense margins and a credible path to positive cash flow. ANA's expected 737 MAX deliveries beginning in December would be another practical sign of customer acceptance and execution.

RBC's lower target is therefore less a verdict on Boeing's order book than a discount for uncertainty. The company can justify a higher valuation if commercial deliveries keep rising and defense losses narrow. Until both happen, the recovery remains real but incomplete.