Q2 Cash Flow Turnaround Supports Boeing’s (BA) Rating Upgrade by Argus

On August 11, Kristina Ruggeri from Argus upgraded The Boeing Company (NYSE:BA) from Hold to Buy, based on the company's long-term prospects within the expanding commercial aerospace segment. The analyst expects the company's impressive backlog, topline growth and margins to continue expanding after the management made progress in addressing concerns linked with production and profitability. Ruggeri's price target of $265 results in more than 26% upside potential as of August 28 closing. Let's explore the underlying business fundamentals that support this rating upgrade.

Recent financials clearly back the rating upgrade by Argus, as the company reported $24.6 billion in Q2 2026 revenue compared to $22.7 billion during Q2 2025. The 8% topline expansion primarily reflected 171 commercial deliveries during the quarter. Despite a core loss of ($0.76) per share, the company's cash flows turned positive amid improved working capital. In the second quarter, it posted $1.4 billion in operating cash flow and $631 million in free cash flow. Management reiterated its optimistic FCF projections, with a full-year guidance between $1 billion and $3 billion, depending partly on delivery volumes and timing of customer receipts.

The company's demand backlog further strengthens the bullish narrative, as it reported $715 billion in total backlog by the end of second quarter. This included a backlog of $597 billion for commercial airplanes segment, involving more than 6,200 aircraft. It is composed of thousands of orders for 737 MAX, along with elevated demand across its wide-body segment covering 767, 777, and 787 programs. Backlogs for Defense, Space & Security, and Global Services segments stood at $85 billion and $33 billion, respectively.

Company President and CEO, Kelly Ortberg, reflected on the remainder of the year, stating:

"While there is more work ahead in the second half of the year, the momentum we are building continues to move Boeing in the right direction."

Profitability Concerns and High Leverage

The 777X timeline has repeatedly slipped, generating billions in associated charges. Meanwhile, the Defense, Space & Security unit continues struggling with fixed-price development contracts that have produced multibillion-dollar losses, remaining a drag on margins and execution. Profitability and thin margins continue to be causes of concern for investors, despite the ongoing "turnaround" narrative. A major issue is the sustainability of profits reported in certain quarters, which adds to the unpredictability of operations.