Investors have had plenty of reasons to question Boeing over the past few years, but Wall Street is starting to separate the company’s defense story from its better-known commercial aviation challenges.
Citi is turning more constructive on parts of the aerospace and defense sector after a sharp pullback, arguing that valuations have compressed even as demand signals remain strong across key defense markets. In that call, Boeing is one of the more interesting names because its defense business is showing signs of momentum just as government spending priorities are shifting toward missile defense, space, advanced aircraft, and munitions.
That gives Boeing investors a new layer to watch. The company is still judged heavily by 737 production, 777X timing, and aircraft deliveries, but its defense segment is becoming a more important part of the stock’s recovery case.
Boeing’s defense business gives Citi a stronger case
Citi’s broader call is built around the idea that the aerospace and defense selloff may have gone too far. The firm reportedly raised its Boeing price target to $260 from $256 while keeping a Buy rating, according to a report from 24/7 Wall St. summarizing Citi’s latest call.
Boeing’s latest quarterly results give that argument more weight. In the first quarter, the company reported total revenue of $22.2 billion, up 14% from the prior year, while its total backlog grew to a record $695 billion. Boeing also reported a GAAP loss of 11 cents per share and a core loss of 20 cents per share, showing that the recovery is still uneven even as demand remains strong.
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The cleaner part of the story was Boeing Defense, Space & Security. That segment generated $7.6 billion in first-quarter revenue, up 21% from a year earlier, while operating earnings rose to $233 million from $155 million. The segment’s backlog climbed to a record $86 billion, with 27% tied to customers outside the United States.
That backlog matters for Boeing because defense contracts can give investors longer visibility than the quarter-to-quarter aircraft delivery numbers that often dominate the stock. Boeing said in its 10-Q that the defense revenue increase was driven by proprietary and weapons programs, higher KC-46 production, Foreign Military Sales to Israel and Japan, and the acquisition of Spirit’s defense business.
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Missile defense demand adds a timely catalyst
The defense setup around Boeing has also improved because missile defense has become a more visible government priority. In April, Boeing and the U.S. Department of War agreed to a seven-year framework designed to triple production of PAC-3 seekers, which are used in Patriot Advanced Capability-3 missile interceptors. Boeing said the agreement is meant to meet global demand for air and missile defense systems that protect service members, civilians, and critical infrastructure.
Boeing said it has put more than $200 million into expanding PAC-3 seeker production capacity in Huntsville, Alabama, since 2024. That includes new factory space, advanced manufacturing tools, and additional production capacity tied to the missile defense supply chain.
The government backdrop supports Citi’s view that the defense pullback may have created an opportunity in select names. The fiscal 2026 defense budget proposal included $2.5 billion for missile and munitions production expansion, according to the Department of War.
That funding environment does not guarantee a smooth path for Boeing, but it helps explain why investors are paying closer attention to companies tied to air defense, advanced weapons, and production capacity. Boeing’s role in PAC-3 seekers places it in one of the areas where demand has become more urgent.
Boeing’s F-47 win raises the long-term stakes
Boeing also has a longer-term catalyst through the Air Force’s Next Generation Air Dominance program. In March 2025, the Department of the Air Force awarded Boeing the engineering and manufacturing development contract for the F-47, which the Air Force described as the world’s first sixth-generation fighter aircraft.
That award gives Boeing’s defense business a marquee program at a time when the company needs to show it can execute on large, complex contracts. The Air Force said the F-47 is intended to advance U.S. air superiority, which makes the program strategically important even before it becomes a larger revenue contributor.
Boeing still has risks that investors cannot ignore. Its defense business has faced pressure from fixed-price development programs in recent years, and the company’s 10-Q warned that development programs can involve complex design, technical, and certification challenges.
The bullish case from Citi is that the market may now be discounting too much of that risk after the sectorwide pullback. Boeing’s commercial recovery still has to improve, but its defense backlog, PAC-3 expansion, and F-47 win give the stock a more durable defense-focused story than it had a year ago.
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