Boeing Co BA, will be reporting its fourth-quarter earnings on Jan. 31. Wall Street expects a negative 74 cents in EPS and $21.12 billion in revenues as the company reports before market hours.

Boeing presents an intriguing investment opportunity, albeit with significant challenges and risks. The stock, down 2% over the past year, trades at a discount to its competitor Airbus SE EADSF.

On a Price/Cash Flow basis, Boeing trades at 20.57 compared to Airbus at 24.16. This discount can be primarily attributed to uncertainties surrounding management’s 2025/2026 targets due to ongoing supply chain issues and the negative impact of the Alaska Airlines ALK incident on public sentiment.

Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Boeing Investment Thesis 

The core of Boeing’s investment proposition lies in the robust demand side of the aviation industry’s recovery, with a record order flow and a substantial backlog. While the company faces challenges, such as lingering public skepticism and prior quality issues, the overall trajectory hinges on its ability to execute key strategies.

However, the introduction of artificial intelligence (AI) into the supply chain management could potentially revolutionize Boeing’s approach, addressing quality concerns and enhancing profitability.

Boeing’s success depends on navigating through its sizable Covid-related inventory overhang, improving pricing yields in its commercial aircraft business, and addressing costly fixed-price contracts in the defense segment.

Additionally, the company must achieve an ambitious production ramp-up of approximately 53% for the 737 and 150% for the 787 to meet demand effectively. An earlier-than-expected clearance of 737 MAX deliveries to China could boost confidence.

Also Read: Boeing Withdraws Key Safety Exemption Request For 737 MAX 7, 10 Amid Growing Safety Concerns

Boeing Analysts' Focus & Consensus Ratings

Q4 Analysts' Focus: Analysts will be watching Boeing plans regarding adopting innovative solutions, such as AI, to overhaul its traditional processes.

The current approach, reliant on manual labor, is deemed unsustainable, and a shift towards leveraging AI technology could not only mitigate risks but also position Boeing for long-term success in a rapidly evolving aviation landscape. Monitoring the progress of these initiatives will be crucial for evaluating Boeing’s potential as an investment.

Factors that will be under analysts’ watch include Boeing’s progress in margins for both its divisions – Commercial Aviation (BCA) and Defense Systems (BDS). Management’s plans regarding the path to execution of higher production rates will also be under close scrutiny.

Ratings & Consensus Estimates: Consensus analyst ratings on Boeing stock currently stand at a Buy with a price target of $216.41.

BA Price Action: Boeing stock closed 0.14% lower at $205.19 on Monday.

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