Boeing: Back to the Future? Resolving multiple issues last week

Boeing shares fell 8% in the last month, driven by comments on 737/787 rates and 777X certification, a possible SPEEA strike and FCF concerns, as well as reports on a software glitch. Events last week, however, should reduce concerns. The FAA determined the VNAV-U14 software glitch is not a threat to safety, consistent with prior assessments of the MAX-8 and -9, which in principle should make near-term MAX-10 certification likely (MAX-7 is already certified). SPEEA approved the proposed contract, preventing a strike that could have slowed production and delayed certification of the MAX-10 and 777X. Boeing won the Navy's F/A-XX fighter award, adding to the Air Force F-47 program and giving Boeing long-term leadership in sixth-gen fighter aircraft. BCA production rates still must be watched, with the 737MAX seen on track at 47/month. Bernstein maintains an Outperform rating with a $298 price target, implying ~54% upside to the 2 Oct close of $193.56. Downside risks include an extended st