Investing.com -- Bernstein has upgraded Boeing (NYSE:BA) to Outperform from Market-Perform, hiking its price target to $218 from $181, citing a clearer path to growth across both its commercial and defense units.

“Boeing is now making the progress it needed for the growth trajectory we expected before the Alaska door plug accident in January 2024,” analysts led by Douglas S. Harned said in a note.

“While we cannot assume all risks are gone, after high FAA scrutiny, Boeing Commercial Airplanes (BCA) should be on a much firmer path than in 2023,” he added.

Boeing’s shares rose nearly 2% in premarket trading Monday.

The upgrade follows signs of stabilization in Boeing’s commercial operations. Bernstein expects the company to reach a 737 MAX production rate of 38 per month by July, a level consistent with management’s guidance.

Further rate increases to 42 per month could follow by year-end, while the 787 program is also on track to ramp to seven units per month in the second half as heat exchanger and quality issues are resolved.

Although the 737-7 and 737-10 certifications remain a concern, Bernstein believes any delays are unlikely to significantly alter the broader delivery timeline.

On the defense side, Boeing’s outlook is also improving. The recent F-47 win marks a step forward for Boeing Defense, Space & Security (BDS), and could restore credibility after years of underperformance and recurring charges.

“Boeing’s F-47 win reinvigorates its defense business, without adding fixed-price development risk,” Harned wrote. The analyst also noted the possibility of an imminent award in the F/A-XX competition, where Boeing remains a contender.

While risks remain, including tariff headwinds and halted China deliveries, Bernstein believes these challenges are manageable.

The jetmaker has estimated a $400 million impact from tariffs this year, while approximately 50 undelivered aircraft destined for Chinese carriers can be redirected to other customers.

“The halt to China deliveries is negative, but in the worst case those airplanes can easily be remarketed,” Harned said.

Still, Bernstein lowered its near-term earnings forecasts due to higher-than-expected BCA costs and tariff pressures.

Longer-term, the outlook appears more promising, supported by stronger free cash flow projections and improved liquidity following the planned $10.5 billion Jeppesen sale.

“The longer-term story is much more de-risked than it was six months ago,” the analysts said.

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