Goldman Sachs analysts project a positive outlook for the commercial aerospace sector through 2025, anticipating a significant replacement wave of aging aircraft fleets by the decade’s end. This optimism is buoyed by the recovery of air travel to pre-pandemic levels and a strong order cycle for Boeing and Airbus, despite Boeing’s challenges in recent years, including the Max jet incidents and production concerns. With Boeing’s Renton factory restarting production, analysts express hope for a resurgence in aircraft deliveries, forecasting a return to 2018 delivery levels by 2026. The analysts note that the Boeing supply chain continues to face disturbances from delays and material shortages, but conditions are expected to improve as the industry stabilizes.
Boeing’s ongoing turnaround strategy is under scrutiny, particularly regarding its ability to effectively restart production in Renton and address its lingering issues. The analysts underscore the importance of a successful turnaround for Boeing, which has seen its market shares fluctuate significantly, trading between $100 and $250 in recent years. Key developments for the company include a new CEO, the resolution of union strike issues, and the raising of $21 billion in new equity capital to mitigate liquidity and credit-related concerns. Despite ongoing challenges, analysts believe that much of this uncertainty is already factored into Boeing’s stock price, providing a potentially favorable investment opportunity.
As part of their research, Goldman analysts have also highlighted several “Buy” recommendations within the aerospace industry, underscoring opportunities for growth. Among these, Woodward stands out for its significant gains in narrowbody aircraft content, including engine sales, which could enhance its aftermarket revenue over time. Meanwhile, GE Aerospace is expected to leverage its LEAP engine’s market share growth while managing ongoing supply chain difficulties to increase engine output and aftermarket activity. With these prospects, GE is positioned to benefit from margin improvements and shareholder returns.
Howmet, CAE, Ducommun, TransDigm, and HEICO are also featured positively in the analysts’ recommendations. Howmet’s conservative revenue outlook hints that the company may exceed expectations as it capitalizes on increased spare parts demand and pricing strategies. CAE’s strong position in the simulation and training market likewise suggests promising returns as its defense segment rebounds. Meanwhile, Ducommun is poised for growth as OEM production ramps up, while TransDigm benefits from an M&A-focused business model reinforcing its aftermarket market dominance.
In addition, Textron and Bombardier are cited as attractive investment opportunities due to their strong market positions and growth potential in the business jet sector. Bombardier’s substantial backlog suggests continued aircraft delivery momentum, while Embraer is noted for its solid foothold in the regional jet market and enhanced defense division performance. Overall, the sector exhibits promising prospects, with aerospace valuations appearing stable compared to overvalued segments of the broader market.
Looking ahead, the anticipated replacement demand for jets could significantly aid Boeing, allowing for potential recovery from its prolonged downturn. Analysts agree that while challenges remain, the long-cycle nature of the aerospace industry positions it well for recovery in the coming years. As the market normalizes and demand rises, companies like Boeing could find themselves at a pivotal juncture that not only alleviates current issues but also propels them into a new growth phase. This sustained optimism among analysts may signal an impending rebound, benefiting stakeholders across the aerospace value chain.