Boeing NYSE: BA Recommendation: BUYBoeing’s strong fundamental business model and entrenched...

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BoeingNYSE: BA

Recommendation: BUY

Connor Campbell, Tom Daly, DC Morris, Andrew Seketa

Introduction

2Source: Wall Street Journal

Investment Thesis

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Recommendation: Given recent investor panic relating to the grounding of the 737 Max, Boeing Co. (NYSE:BA) is undervalued in the market with substantial 3-12 month upside; therefore, we recommend a buy

Rationale: Boeing’s strong fundamental business model and entrenched position in the market are largely unaffected by the grounding of the 737 Max

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Previous Boeing aircraft groundings made minimal impact on Boeing’s performance

Switching costs in the airplane manufacturing industry limit the loss of Boeing’s customers

Price Target: $426.52

13.98% upside to current price $374.21

Current issues with the 737 Max are easily rectified with low costs

4Sources: Company 10-K, Bloomberg, Melius Research† Estimates projected by Melius Research based on previous settlements, penalties and groundings, as well as current jet lease rates

What happened? What went wrong?

Regulator Involvement Potential Liabilities†

Lion Air Flight 610• Oct 29, 2018 – Boeing 737 MAX

crashed shortly after takeoff, killing all 189 on board on flight from Jakarta to Pangkal Pinang

Ethiopian Airlines Flight 302• Mar 10, 2019 – Boeing 737 MAX

crashed shortly after takeoff, killing all 157 on board on flight from Addis Ababa to Nairobi

MCAS (Maneuvering Characteristics Augmentation System)• Newly designed software on 737 MAX to prevent stalling

situations by automatically pushing plane’s nose down• To achieve more fuel efficiency on 737 MAX, plane’s engines

were positioned closer to nose which increases stall risk• System was triggered by false alarm – typically not a problem

Pilot Training• Pilots, per international regulators, were not required to

comprehensively retrain to fly the new 737 MAX• Black box findings show pilots tried to stop the MCAS system

using incorrect procedure – the procedure for older 737’s

Derivative Classification by FAA• FAA classified the 737 MAX design as a derivative of previous

737 models– leading to quick safety approval and little retraining required of pilots

• Rushed approval process – A320neo development was 9 months ahead of 737 MAX

Dissenting International Opinions• Brazilian regulators, prior to crashes, singled out MCAS as a

change that necessitated pilot retraining for 737 MAX• International regulators grounded the 737 MAX prior to the

FAA– traditionally regulators abroad followed FAA’s decision.

Cost Est. Amount

Legal Settlement $1.7 billion

DOJ Settlement $1.0 billion

Compensation to customers $540 million

Repair/Maintenance Cost $260 million

Total Cost Estimates $3.5 billion

Situation Overview

Company Overview

5Sources: Airbus and Boeing Annual Reports, Yahoo Finance, Bloomberg

Company Segmentation 1 Year Stock Chart

Extensive Backlog 2018 Revenue Breakdown ($ in millions)

Boeing Commercial Airlines:

• BCA is the core division within Boeing, manufacturing airplanes for commercial airliners and shipping companies

Boeing Defense, Space, and Security:

• BDS manufactures manned and unmanned military vehicles, while also providing R&D services to governments. 86% of its revenue comes from the US government

Boeing Global Services:

• BGS provides logistical, training, and maintenance services to Boeings private and public sector customers

60%23%

17%

BCA BDS BGS

• Companies large and small across the globe have ordered Boeing planes years out into the future

• Boeing’s entire backlog currently stands at over $400bn, equating to roughly 6,000 planes and 7 years of production

2,000

3,000

4,000

5,000

6,000

A320neobacklog

737 MAXbacklog

250.00

300.00

350.00

400.00

450.00

Mar-27-2018

May-27-2018

Jul-27-2018

Sep-27-2018

Nov-27-2018

Jan-27-2019

Mar-27-2019

• Airbus at max levels of production can make 756 A320neo aircrafts.

• Backlogged 7.7 years• Boeing at max levels of

production can make 684 737 MAX aircraft

• Backlogged 6.8 years

Airplane Manufacturing Overview

6Sources: Bloomberg, Company Annual Reports, Wall Street Journal

Overview Boeing and Airbus’ Duopoly

Industry Model

• Air traffic has exploded in the 21st century, growing at an average rate of 6.75% since 2010

• To meet this explosion in demand, manufacturers have been forced to make significant investments in increasing production rate

• Most airlines around the world are being forced to update their fleets as environment regulations and pricing pressure require companies to fly incredibly fuel efficient planes

• Ecommerce is also driving growth in air cargo manufacturing

Changing Airline Industry Landscape

59%

41%

Market Share for Single Aisle Planes

Airbus Boeing

• In the airplane manufacturing industry, companies must place orders years in advance

• In the case of the Boeing 787 Dreamliner, the first order was placed in 2004 and the first delivery was in 2012. Meanwhile, some 737 MAX’s are not set to be delivered until 2030

Airbus and Boeing make up 99%+ of the commercial aircraft manufacturing market share

• Once a company places an order, it is very difficult for them to rescind their commitment.

• Generally, about 50% of the cash is sent before the plane arrives, and companies do not want to find another buyer and move to the bottom of their backlog

Fixing the 737 MAX

7Sources: Boeing, 10-K, Bloomberg, Google Flights

MCAS Hotfix Strong Catalyst

When will 737 MAX’s fly again?

• Boeing is currently working on a hotfix for the current MCAS system that they are looking to launch as soon as next week

• This fix will change the MCAS system to require both sensors to engage the system, and the system will only attempt to bring the nose down once

• Boeing is also introducing a retraining program, particularly for the MCAS system on the 737 MAX

• Likely months before 737 MAX’s will be approved to fly again internationally

• FAA, in light of their culpability in original situation, will be much more comprehensive in reapproval

• International regulators in multiple countries will no longer rely on FAA data and will be conducting their own tests of software update

• Department of Justice has issued subpoenas to at least one person involved with 737 MAX development

• Unclear what is under investigation, likely safety and certification procedures conducted by Boeing

Restoring Image: is an aircraft a B2B or B2C product?

• A major catalyst for upside in Boeing will be the expedient success of its software patch and retraining

• Entire grounding situation unlikely to change airline opinions on the company’s products as shown in 2013 787 Dreamliner incident

• Once grounding order is lifted, Boeing can also deliver planes it is currently producing to customers

• 40-60% of revenue from 737 MAX’s comes at delivery

• Lift of grounding order will also have a positive effect on Boeing’s share price

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Battery Fires and Fuel Leaks on the 787

Current 737 Issues

• In January 2013, only months after the introduction of the Boeing 787 Dreamliner, there were six incidents of battery fires and fuel leaks aboard 787’s that led to international groundings for over four months

• All Nippon Air, the only company to comment on its losses from the groundings, reported to lose $15 mm from 17 grounded planes

• While the total amount to all companies that Boeing had to pay out then was undisclosed, analysts believe it was around $500 mm

• These grounding costs for Boeing proved relatively minimal after insurance, and following the secondary review process the Dreamliner emerged with the reputation as a safe, fuel efficient product.

• Sales recovered quickly and outpaced the original target of 1,300 orders

• Despite the fact that the 737 incidents have resulted in two fatal crashes, many airline consultants believe this grounding will be shorter than the 787 one in 2013

• The current issue centers only on the MCAS system, whereas previous 787 groundings dealt with battery and fuel tank issues that took months to identify

• FAA regulators have said they expect the groundings to last until mid-May

• United, meanwhile, has taken the 737 MAX series out of its schedule until at least June 6th

Per Unit Cost of Grounding (Totals in MM)

6 weeks 8 weeks 10 weeks 12 weeks 14 weeks

$40,000.00 $1.68 $2.24 $2.80 $3.36 $3.92

$50,000.00 $2.10 $2.80 $3.50 $4.20 $4.90

$60,000.00 $2.52 $3.36 $4.20 $5.04 $5.88

$70,000.00 $2.94 $3.92 $4.90 $5.88 $6.86

$80,000.00 $3.36 $4.48 $5.60 $6.72 $7.84

787 Precedent Issues2

Sources: Bloomberg, Company Annual Reports, Wall Street Journal

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Overview

Garuda Orders and Deliveries 737 Max

§ Backorders for Boeing's 737 Max are roughly 4,700 (about 80% of the company’s backorders) and roughly 5,800 for its rival, Airbus’ A320neo

§ Airlines demand for these fuel efficient single aisle aircraft like the 737 MAX and A320neo is simply insatiable, as both Boeing and Airbus are backordered 6-8 years each

§ Airlines are switching out of their aging and fuel inefficient fleets as margins are trimmed across the industry by introduction of budget airlines such as Frontier, Allegiant, and Spirit

Alternatives?

§ With such high levels of backorders, it is simply unfeasible for all Boeing orders to be recalled and switched to Airbus

§ Airlines would have to wait much longer than usual and this would negatively impact operations and sales with limited amounts of aircraft

§ In order for airlines to switch from being a Boeing carrier to an Airbus carrier would lead to massive fixed costs (ie pilot retraining, entire new inventory of spare parts)

§ For example, Southwest only flies 737s (249 737 Max). It would be simply too massive of a cost to switch to an Airbus product

§ Garuda is Indonesia's largest air carrier and is currently considering canceling an order for 49 737 MAX aircraft

§ Garuda’s Indonesia spokeswoman, Ikhsan Rosan, released a statement that, “its business would be damaged due to customer alarm over the crashes”

§ Garuda has recently had a management reshuffle, as the airliner is burning cash and has not been profitable

Prohibitive Switching Costs

Sources: Bloomberg, Company Annual Reports

0

1000

2000

3000

4000

5000

6000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Plan

es

YearOrders # Delivered

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Key Risks

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✓ The airline manufacturing industry has been growing around 6% per year since 2010 with no indications of demand decreasing

✓ If Airbus were to try and gain orders from Boeing legacy airlines, it would be nearly impossible to gain new business unless the airline wanted to wait more than 8 years or Airbus somehow cancels current orders to free up resources to help the new companies.

✓ After retraining pilots correctly to use the new technology in the 737 MAX, there are no known reasons a 737 MAX would fail from plane or human error in operation of the plane: Boeing has a proven track record for safety since its inception

✗ Changes in US or global economic conditions could affect potential orders in the long-term.

✗ Airbus attempts to work out solutions for Boeing only airlines and attempts to convert them over to buying Airbus products and A320neos’ instead of 737 MAX

Key Risks Mitigants

✗ Another crash of a 737 Max occurs and the company’s reputation is tarnished to no return

Final Recommendation

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Recommendation: Boeing (NYSE: BA) is undervalued in the market with substantial short-term upside; therefore, we recommend a buy

Base Case

Price Target: $426.52Upside: 13.98%

Upside Case

Price Target: $495.89Upside: 32.52%

Downside Case

Price Target: $311.65Downside: -16.72%

Appendix

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Valuation – Comparable Companies Analysis

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Valuation StatisticsMarket Enterprise EV / Revenue EV / EBITDA Price / Earnings

Company Ticker Capitalization Value 2017A LTM 2017A LTM 2017A LTMAirbus SE ENXTPA: AIR $90,255 $86,704 1.4x 1.4x 14.9x 15.8x 62.0x 29.7x Safran SA ENXTPA:SAF 51,896 55,571 2.6x 2.6x 16.0x 16.8x 13.8x 40.2x Raytheon Company NYSE: RTN 51,060 52,507 2.0x 1.9x 13.9x 13.8x 25.5x 17.8x United Technologies Corporation NYSE: UTX 108,775 148,160 2.3x 2.2x 13.4x 13.2x 19.8x 19.4x 3M Company NYSE: MMM 119,329 130,824 4.0x 4.0x 15.7x 15.7x 26.3x 23.3x

The Boeing Company NYSE: BA $209,073 $214,356 2.1x 2.1x 15.4x 15.4x 27.2x 20.7x

25th Percentile $51,896 $55,571 2.0x 1.9x 13.9x 13.8x 19.8x 19.4x Mean $84,263 $94,753 2.4x 2.4x 14.8x 15.0x 29.5x 26.1x Median $90,255 $86,704 2.3x 2.2x 14.9x 15.7x 25.5x 23.3x 75th Percentile $108,775 $130,824 2.6x 2.6x 15.7x 15.8x 26.3x 29.7x

Operating StatisticsRevenue Revenue Growth EBITDA EBITDA Margin

Company Ticker 2017A LTM '16-'17A LTM 2017A LTM 2017A LTMAirbus SE ENXTPA: AIR $59,022 $63,707 (11.4%) 7.9% $3,740 $5,487 6.3% 8.6% Safran SA ENXTPA:SAF 17,080 21,176 2.8% 24.0% 3,525 3,309 20.6% 15.6% Raytheon Company NYSE: RTN 25,348 27,058 5.1% 6.7% 3,797 3,801 15.0% 14.0% United Technologies Corporation NYSE: UTX 59,837 66,501 4.5% 11.1% 9,829 11,256 16.4% 16.9% 3M Company NYSE: MMM 31,657 32,765 5.1% 3.5% 8,670 8,358 27.4% 25.5%

The Boeing Company NYSE: BA $94,005 $101,127 0.5% 7.6% $12,160 $13,957 12.9% 13.8%

Low $17,080 $21,176 (11.4%) 3.5% $3,525 $3,309 6.3% 8.6% Mean $38,589 42,241 1.2% 10.7% $5,912 $6,442 17.2% 16.1% Median $31,657 32,765 4.5% 7.9% $3,797 $5,487 16.4% 15.6% High $59,837 66,501 5.1% 24.0% $9,829 $11,256 27.4% 25.5%

Valuation – WACC

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Capital StructureDebt-to-Total Capitalization 11.77%Equity-to-Total Capitalization 88.23%

Cost of DebtCost of Debt 3.40%Tax Rate 12.00%After-tax Cost of Debt 2.99%

Cost of EquityRisk-free Rate(1) 2.65%Market Risk Premium(2) 6.00%Levered Beta 1.09

Cost of Equity 9.17%

WACC 8.44%

Valuation – DCF (Base)

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($ in millions) 2015A 2016A 2017A 2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025ETotal Revenue $96,114.0 $93,496.0 $94,005.0 $101,127.0 $106,158.9 $112,385.6 $118,805.8 $124,270.8 $129,304.1 $132,568.6 $135,631.2

Revenue Growth -- (2.7%) 0.5% 7.6% 5.0% 5.9% 5.7% 4.6% 4.1% 2.5% 2.3%

ExpensesCOGS 82,088.0 79,026.0 76,612.0 81,490.0 84,927.1 89,346.5 94,153.6 98,173.9 102,150.3 104,729.2 107,148.7

Gross Profit $14,026.0 $14,470.0 $17,393.0 $19,637.0 $21,231.8 $23,039.0 $24,652.2 $26,096.9 $27,153.9 $27,839.4 $28,482.6 Gross Margin 14.6% 15.5% 18.5% 19.4% 20.0% 20.5% 20.8% 21.0% 21.0% 21.0% 21.0%Operating Expenses 4,695.0 4,225.0 6,957.0 7,632.0 7,934.1 8,399.5 8,879.3 9,287.8 9,663.9 9,907.9 10,136.8

Operating Income (EBIT) $9,331.0 $10,245.0 $10,436.0 $12,005.0 $13,297.7 $14,639.6 $15,772.9 $16,809.1 $17,489.9 $17,931.5 $18,345.7 EBIT Margin 9.7% 11.0% 11.1% 11.9% 12.5% 13.0% 13.3% 13.5% 13.5% 13.5% 13.5%Income Tax Expense (28%) 1,979.0 749.0 1,649.0 1,144.0 2,127.6 2,342.3 2,523.7 2,689.5 2,798.4 2,869.0 2,935.3

EBIAT $7,352.0 $9,496.0 $8,787.0 $10,861.0 $11,170.0 $12,297.2 $13,249.2 $14,119.7 $14,691.5 $15,062.4 $15,410.4

Cash FlowPlus: D&A 1,833.0 1,889.0 2,047.0 2,114.0 2,265.4 2,398.3 2,535.3 2,651.9 2,759.3 2,829.0 2,894.4

Discretionary Cash Flow 9,185.0 11,385.0 10,834.0 12,975.0 13,435.5 14,695.5 15,784.5 16,771.6 17,450.9 17,891.4 18,304.8Less: Increase in NWC 0.0 7,295.0 (2,180.0) 1,023.0 (1,020.5) (297.9) (223.7) (214.3) (106.2) (68.9) (64.6)Less: CapEx (2,450.0) (2,613.0) (1,739.0) (1,722.0) (1,885.8) (1,996.4) (2,110.4) (2,207.5) (2,296.9) (2,354.9) (2,409.3)

Free Cash Flow $6,735.0 $16,067.0 $6,915.0 $12,276.0 $10,529.2 $12,401.3 $13,450.4 $14,349.8 $15,047.8 $15,467.7 $15,830.9 Free Cash Flow Growth -- 138.6% (57.0%) 77.5% (14.2%) 17.8% 8.5% 6.7% 4.9% 2.8% 2.3%

Unlevered Free Cash FlowWACC 8.44%Discount Period 0.5 1.5 2.5 3.5 4.5 5.5 6.5Discount Factor 0.96 0.89 0.82 0.75 0.69 0.64 0.59

Present Value of Free Cash Flow $10,111.0 $10,981.3 $10,982.8 $10,804.8 $10,448.0 $9,903.2 $9,346.5

Valuation – DCF (Base)

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Enterprise ValueCumulative Present Value of FCF $72,577.6 Terminal ValueTerminal Year EBITDA $21,240.1 Exit Multiple 15.0x

Terminal Value $319,557.0 Discount Factor 59.04%

Present Value of Terminal Value $188,665.5 % of Enterprise Value 72.2%

Enterprise Value $261,243.1

DCF Implied Equity Value and Share PriceEnterprise Value $261,243.1

Less: Total Debt $27,973.0 Plus: Cash & Cash Equivalents $8,564.0

Implied Equity Value $241,834.1

Implied Share Price $426.52

Shares Outstanding 567

DCF Sensitivity AnalysisWACC

426.52 6.4% 7.4% 8.4% 9.4% 10.4%13.0x $427.92 $404.34 $382.28 $361.62 $342.27 14.0x $452.89 $427.83 $404.40 $382.46 $361.91

EV/EBITDA 15.0x $477.85 $451.32 $426.52 $403.29 $381.54 16.0x $502.81 $474.81 $448.63 $424.13 $401.18 17.0x $527.77 $498.30 $470.75 $444.97 $420.82

Valuation – DCF (Upside)

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FYE December 31, FYE December 31,($ in millions) 2015A 2016A 2017A 2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025ETotal Revenue $96,114.0 $93,496.0 $94,005.0 $101,127.0 $108,326.9 $116,086.7 $123,346.4 $129,501.2 $135,330.1 $139,891.9 $144,171.9

Revenue Growth -- (2.7%) 0.5% 7.6% 7.1% 7.2% 6.3% 5.0% 4.5% 3.4% 3.1%

ExpensesCOGS 82,088.0 79,026.0 76,612.0 81,490.0 86,661.5 92,288.9 96,827.0 101,334.7 105,692.8 109,115.7 112,454.1


Operating Income (EBIT) $9,331.0 $10,245.0 $10,436.0 $12,005.0 $13,569.2 $15,121.7 $17,300.8 $18,487.8 $19,523.0 $20,321.0 $20,942.7 EBIT Margin 9.7% 11.0% 11.1% 11.9% 12.5% 13.0% 14.0% 14.3% 14.4% 14.5% 14.5%Income Tax Expense 1,979.0 749.0 1,649.0 1,144.0 2,171.1 2,419.5 2,768.1 2,958.1 3,123.7 3,251.4 3,350.8

EBIAT $7,352.0 $9,496.0 $8,787.0 $10,861.0 $11,398.2 $12,702.2 $14,532.7 $15,529.8 $16,399.3 $17,069.6 $17,591.9

Cash FlowPlus: D&A 1,833.0 1,889.0 2,047.0 2,114.0 2,311.7 2,477.3 2,632.2 2,763.5 2,887.9 2,985.3 3,076.6

Discretionary Cash Flow 9,185.0 11,385.0 10,834.0 12,975.0 13,709.8 15,179.5 17,164.9 18,293.3 19,287.2 20,054.9 20,668.5Less: Increase in NWC 0.0 7,295.0 (2,180.0) 1,023.0 (1,059.0) (331.3) (552.1) (248.0) (205.2) (156.6) (104.6)Less: CapEx (2,450.0) (2,613.0) (1,739.0) (1,722.0) (1,924.3) (2,062.1) (2,191.1) (2,300.4) (2,403.9) (2,485.0) (2,561.0)




Valuation – DCF (Upside)

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495.89 6.8% 7.8% 8.8% 9.8% 10.8%13.7x $489.25 $462.32 $437.13 $413.54 $391.43 14.7x $516.87 $488.32 $461.61 $436.61 $413.19

EV/EBITDA 15.7x $544.50 $514.32 $486.10 $459.68 $434.94 16.7x $572.12 $540.32 $510.59 $482.75 $456.69 17.7x $599.75 $566.32 $535.07 $505.83 $478.44

Valuation – DCF (Downside)

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FYE December 31, FYE December 31,($ in millions) 2015A 2016A 2017A 2018A 2019E 2020E 2021E 2022E 2023E 2024E 2025ETotal Revenue $96,114.0 $93,496.0 $94,005.0 $101,127.0 $102,561.5 $106,898.3 $111,403.1 $115,202.0 $118,511.2 $121,230.5 $122,893.2

Revenue Growth -- (2.7%) 0.5% 7.6% 1.4% 4.2% 4.2% 3.4% 2.9% 2.3% 1.4%

ExpensesCOGS 82,088.0 79,026.0 76,612.0 81,490.0 83,074.8 86,630.2 90,280.8 93,359.5 96,041.2 98,245.0 99,592.4


Operating Income (EBIT) $9,331.0 $10,245.0 $10,436.0 $12,005.0 $11,821.4 $12,278.7 $12,796.2 $13,232.5 $13,612.6 $13,925.0 $14,116.0 EBIT Margin 9.7% 11.0% 11.1% 11.9% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5% 11.5%Income Tax Expense 1,979.0 749.0 1,649.0 1,144.0 1,891.4 1,964.6 2,047.4 2,117.2 2,178.0 2,228.0 2,258.6

EBIAT $7,352.0 $9,496.0 $8,787.0 $10,861.0 $9,930.0 $10,314.1 $10,748.8 $11,115.3 $11,434.6 $11,697.0 $11,857.4

Cash FlowPlus: D&A 1,833.0 1,889.0 2,047.0 2,114.0 2,188.7 2,281.2 2,377.3 2,458.4 2,529.0 2,587.0 2,622.5

Discretionary Cash Flow 9,185.0 11,385.0 10,834.0 12,975.0 12,118.7 12,595.3 13,126.1 13,573.7 13,963.6 14,284.0 14,479.9Less: Increase in NWC 0.0 7,295.0 (2,180.0) 1,023.0 (614.8) (48.4) (64.4) (54.3) (47.3) (38.9) (23.8)Less: CapEx (2,450.0) (2,613.0) (1,739.0) (1,722.0) (1,821.9) (1,898.9) (1,978.9) (2,046.4) (2,105.2) (2,153.5) (2,183.0)




Valuation – DCF (Downside)

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311.65 6.8% 7.8% 8.8% 9.8% 10.8%13.7x $339.24 $320.37 $302.72 $286.18 $270.68 14.7x $358.49 $338.49 $319.78 $302.25 $285.83

EV/EBITDA 15.7x $377.74 $356.61 $336.84 $318.33 $300.99 16.7x $396.99 $374.73 $353.91 $334.41 $316.15 17.7x $416.24 $392.85 $370.97 $350.49 $331.31

Commercial Revenue Build

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In units delivered FYE December 31,2016A 2017A 2018A 2019A 2020A 2021A 2022A 2023A 2024A 2025A

BCA Rev build: Base787 137 136 145 153 161 169 175 180 185 189777 99 74 48 40 33 29 24 20 17 15767 13 10 27 35 41 46 52 56 58 60747 9 14 6 6 5 5 4 3 2 1737 490 529 580 604 653 698 740 777 801 825

Total Sales 748 763 806 839 893 948 996 1,036 1,063 1,0904% 6% 6% 5% 4% 3% 3%

BCA Rev build: Upside787 137 136 145 155 164 173 180 185 190 194777 99 74 48 43 39 36 33 30 29 27767 13 10 27 36 43 50 57 62 67 70747 9 14 6 7 7 6 6 5 5 4737 490 529 580 626 683 737 782 829 862 896

Total Sales 748 763 806 867 936 1,002 1,056 1,111 1,152 1,1928% 8% 7% 5% 5% 4% 3%

BCA Rev build: Downside787 137 136 145 149 154 157 158 160 162 163777 99 74 48 32 26 22 20 18 17 16767 13 10 27 32 36 39 41 43 45 46747 9 14 6 5 5 5 4 3 2 1737 490 529 580 586 621 658 691 719 740 755

Total Sales 748 763 806 805 841 881 914 943 967 9820% 4% 5% 4% 3% 2% 2%

Boeing NYSE: BA Recommendation: BUYBoeing’s strong fundamental business model and entrenched...

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