FAA Certifies 737 MAX 10, But Key Hurdles Remain for Boeing

What happened

The FAA has officially approved Boeing's 737 MAX 10 for passenger service, clearing one of the remaining certification gates that had been a focus of investor attention. The MAX 10 is the largest variant in the 737 family, with about 40 such aircraft already built and stored at Boeing, and its certification was previously expected by the end of 2026 with first deliveries in 2027. However, the approval does not address the still-pending certification of the smaller MAX 7 or the crucial FAA production certification for Boeing's new 737 North Line, which is needed for the company to increase output above the current approved rate of 47 aircraft per month. Boeing's first-half 2026 results showed improving operational performance with 314 commercial deliveries and $1.2 billion operating cash flow, but the company still carries significant debt and continues to face risks from legacy programs like the 777X and VC-25B. This news validates partial progress but does not yet provide the full regulatory closure needed to sustainably boost production and cash flow.

Implication

The MAX 10 certification removes a source of uncertainty and should support backlog conversion and cash flow in 2027, but the stock still lacks a margin of safety at 87x P/E and 30x EV/EBITDA. Investors should wait for evidence of North Line production certification and MAX 7 approval before adding exposure, as those milestones are necessary for Boeing to achieve rated capacity and meaningful debt reduction. Near-term upside may be limited unless the FAA signals acceleration on remaining requirements; otherwise, the base case value of $235 suggests the stock is nearly fully priced.

Thesis delta

The MAX 10 approval is a positive step but does not alter the core thesis that Boeing's recovery remains gated by FAA action on the MAX 7 and North Line production certification. The news reduces the probability of a bear scenario tied to MAX 10 delays, but the stock still trades near our base-case implied value with no margin of safety. We maintain a WAIT rating until the remaining regulatory hurdles are cleared.