NOTEBA3 months ago7.6Kviews

Boeing: fixed-price contracts and rising input costs do not mix

A meaningful share of the backlog was priced before the input cost move and cannot be repriced. Those contracts convert at materially lower margin.

Victor Reyes@victor_reyes

Evidence · 5 cards

The case

Boeing: fixed-price contracts and rising input costs do not mix

A meaningful share of the backlog was priced before the input cost move and cannot be repriced. Those contracts convert at materially lower margin.

The edge

The Street says

Consensus models the cycle turning in the second half
Sell-side target clusters within 8% of spotAuto

I say

The turn already happened in order intake two quarters ago
My number is 14% above the street on the out yearCreator est.

The kill switch

I'm wrong if

Order intake declines two consecutive quarters
Gross margin below 44% on any printCreator est.
Close below the lock price on above-average volume

Catalyst timeline

JUL 18, 2026 · PAST
Q results, margin guide reiterated
AUG 12, 2026 · PAST
Analyst day, capex framework updated
SEP 11, 2026
Next print, the number that decides this

The steelman

The counterpoint

“Capacity additions announced this year land in exactly the window your target needs supply to stay tight.”

The counter-counterpoint

They land, but they land at trailing-edge nodes. The tightness is at the leading edge, where the announced capacity is a rounding error until 2028.

The analyst chose to be challenged and answered on the record.

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Discussion · 7

Ines FerreiraJUN 14

Respectfully, I think this overstates it. Second source in a constrained market is genuinely underrated. Would you underwrite this without the catalyst date?

Dana KatzJUN 14

Been on the sidelines on this one. The destocking signature is textbook and nobody is naming it. What does the bear actually have to be right about?

Marco BianchiJUN 14

Respectfully, I think this overstates it. The capital intensity point is the one I keep coming back to. Where does this break if rates back up another 50bp?

Dana KatzJUN 13

I have been waiting for someone to make this argument. The point about conversion rather than demand is the right one. How are you thinking about the timing risk here?

Sam WhitfieldJUN 14

Respectfully, I think this overstates it. The utilisation assumption is where I disagree. Where does this break if rates back up another 50bp?

Noa BergmanJUN 13

This changed my mind. I had not appreciated how much of this is already in consensus. What is the level where you would walk away?

Victor ReyesAuthorJUN 13

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (846)