Boeing’s Space Business Faces Tough 2025 Amid Delayed Certification

Is Boeing Stock a Worthy Investment in 2025?

Earlier this year, I predicted that Boeing‘s (NYSE: BA) defense and space (BDS) business, especially its joint venture with Lockheed Martin (NYSE: LMT) called United Launch Alliance (ULA), would have a successful year provided one condition was met.

Anticipated Success of Boeing’s Vulcan Space Rocket

The condition was that the Vulcan space rocket, a product of the Boeing-Lockheed Martin collaboration, would receive national security certification to begin regular launches for the U.S. Space Force. ULA’s CEO was hopeful about getting the certification soon. However, it’s been three months and the certification hasn’t been granted. Without the certification, it looks like Boeing’s stock might face a challenging time in 2025.

Failure to Launch: Impact on Boeing’s Revenue

Vulcan’s certification delay has further implications: It jeopardizes the promise of ULA launching Vulcan 20 times within the year, thereby leading to potential revenue loss for Boeing. This delay could put pressure on Boeing’s projected profits which Wall Street analysts have already factored into their financial models. It also delays Boeing’s return to profitability after three years in the red.

Boeing’s Challenging Stance in 2025

Boeing’s current situation looks precarious. An unresolved labor strike could potentially leave Boeing unprofitable in 2025. The delayed launches would result in lower revenue for Boeing, making profitability by 2026 more likely.

Assessing the Long-term Prospects of Boeing

Despite the short-term difficulties, Boeing’s long-term profitability is not completely off the table. Industry insiders anticipate that Vulcan will secure certification in early March, although the planned 20 launches for 2025 “clearly won’t happen”. This delay could lead to a boost in 2026 launches, potentially benefiting Boeing.

Is it the Right Time to Invest in Boeing?

Given its $130 billion market capitalization and $160 billion enterprise value factoring in net debt, buying Boeing stock would only be attractive once the company begins to generate a minimum of $10 billion in annual free cash flow. Most financial analysts forecast this scenario to occur no sooner than 2028. Therefore, at this moment, Boeing’s stock may not be a viable investment.

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The views expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.