Boeing shares tumbled Tuesday after the plane maker issued disappointing long-term guidance for free cash flow, overshadowing anything good in its third-quarter numbers. The silver lining is that management took its medicine and reset investor expectations now, so the stock can mount a rebound once the dust settles. Revenue in the third quarter increased 4% year over year to $24.19 billion, topping the consensus of $23.84 billion, according to estimates compiled by LSEG. Adjusted earnings per share (EPS) was a loss of 34 cents, steeper than the 21-cent loss the Street was expecting, LSEG data showed. Free cash flow (FCF) came in at $464 million, better than the $330 million expected, according to FactSet. Shares of Boeing are down 10% Tuesday, on pace for their worst day since the April 2025 tariff panic . The stock also sank to a fresh 52-week low. Even before Tuesday’s earnings report, the stock was having a tough few months in the face of the Middle East conflict and issues ramping up production of some jet models. BA YTD mountain Boeing’s year-to-date stock performance. Bottom line Boeing’s actual third-quarter results were not terrible. The problem is what Boeing had to say on the earnings call about free cash flow in the next three years, which made clear CEO Kelly Ortberg still has more work to do in turning around the company and delivering stronger financials. Free cash flow is the primary financial metric on which we judge the stock, given the company is still working its way back to net income profitability. FCF is calculated by subtracting a company’s capital expenditures from its operating cash flow. Unfortunately, the near-term performance and the updated long-term outlook paint different pictures. Boeing’s FCF in the July-to-September period beat expectations for the second quarter in a row, and the company maintained its $2 billion expectation for 2026. But markets are forward-looking beasts, and Boeing letting investors down on the cash-flow ramp in the coming years is, understandably, causing many investors to dump the stock Tuesday. The company expects to arrive at its target of $10 billion in annual free cash flow a year later than Wall Street modeled. Not ideal. On Tuesday’s earnings call, Ortberg detailed the slower-than-expected cadence to reach that target: In 2027, free cash flow is expected to be $3 billion— held back a bit by the increased capex needed to support the next-generation Navy fighter jet contract the company won in September. That’s well short of the $5.7 billion consensus, according to estimates compiled by FactSet. In 2028, Boeing projects FCF of $6 billion, when the Street was modeling $9.6 billion. Finally, in 2029, the company expects to hit the $10 billion target. The FactSet consensus had been at $12.9 billion. Some of the positives in Tuesday’s report are that Boeing exited the quarter with a record $745 billion backlog, and that Ortberg said the company hasn’t seen any changes in customer demand despite the Middle East conflict pushing up jet fuel prices and weighing on aerospace stocks in recent months. If anything, he said Boeing’s more fuel-efficient new jets look like an even better purchase in this environment. With all this in mind, we think Tuesday’s report represents something of a clearing event for the stock. The guidance is not what we were hoping for. But the upshot is that we did indeed get some quantitative guidance, which is important. Although Wall Street estimates are likely coming down once analysts have had a chance to sharpen their pencils and update their models, investors can take comfort in knowing that the stock is now reflecting a more realistic path in the recovery. On CNBC earlier Tuesday, Ortberg said the uncertainty around Boeing’s financial performance is narrowing. Of course, we wish it was narrowing and improving to the upside, not the other way around. Nevertheless, getting three years’ worth of targets is not worthless. Ortberg is likely being extra careful and practicing “UPOD” — underpromise, overdeliver —given the company’s checkered past. For that reason, while clearing events are painful, we also believe this one to be buyable. The record order backlog is an indicator that once Boeing’s production woes are addressed and production is able to ramp, the long-term cash flow targets are indeed achievable, even if not realized as quickly as we would have liked. We’re reiterating our buy-equivalent 1 rating. However, we’re lowering our price target to $225 to reflect the delayed rebound in free cash flow generation. Quarterly commentary In Commercial Airplanes , Boeing said it’s well positioned for the year ahead after the final two variants of its best-selling, narrow-body 737 Max family were certified by the Federal Aviation Administration (the Max 7 in August and Max 10 last week). Boeing said “the 737 program continues to progress toward stabilized production of 47 per month.” The language here matters because the key to Boeing delivering more FCF — and in turn stock price upside — in 2027 will be its ability to ramp monthly production beyond 47 and get to 52. We heard in September that it was taking longer than expected to stabilize output at the 47 level, and Ortberg reiterated that again Tuesday. Wings, in particular, are a bottleneck. “Our output of wings is improving, but we need to demonstrate sustained performance at this level and ensure we have a high confidence plan to step up to rate 52 when the system is ready,” the CEO said. As a result, the ramp to 52 per month is not expected to occur until the back half of 2027. Because of the delayed ramp, the team also now expects to come up shy of its target to deliver 500 737s in 2026. High jet fuel costs are a headwind for airlines and travelers — even if they’ve so far been able to eat the higher costs of air travel — but it may be a tailwind for Boeing. As Ortberg explained on CNBC, the high cost of jet fuel makes more fuel efficient offerings, such as the 737 Max 10, that much more attractive as less-efficient aircraft can be retired. With the way that the Middle East conflict has hurt aerospace stocks, Ortberg’s commentary here is notable. “So far, the airlines have been, for the most part, flowing the higher fuel into ticket prices,” Ortberg added on the earnings call. “I think over the next coming quarters, we’ll have to watch that. But again, at a macro level, I feel pretty good about our ability to manage even if we do see some softening demand on the growth market because there’s plenty of customers who are looking for airplanes faster for replacement.” Outside of the key 737 program, production of the wide-body 787 Dreamliner remains stable at eight per month, with the team expecting to start the ramp to a 10 per month rate before year-end. Boeing still expects FAA certification of its newest wide-body jet, the 777-9, to be received in 2027, with deliveries also expected to begin next year. 777X production is expected to hold at one per month for most of 2027. The program is also expected to be a drag on 2027 FCF before improving in 2028 and flipping positive in 2029. The commercial segment booked 300 net orders in the quarter and exited with a $612 billion backlog, representing over 6,300 airplanes. In Defense, Space & Security , Ortberg called out the company’s recent U.S. Navy contract win, in which it was chosen to design, build and deliver the next-gen F/A-XX Strike Fighter. Ortberg said on the call that this will “shape the company for decades to come,” and called the company’s defense portfolio overall “a little bit of a sleeper.” Last year, Boeing also won the contract for a new Air Force fighter jet. The team continues to target a high-single digit operating margin by the end of the decade. The segment booked $23 billion in orders during the quarter, with the backlog exiting the period at a record $101 billion, not inclusive of the F/A-XX contract win. In Global Services , revenue benefited from higher volumes, and the operating margin benefited from both volume and mix. This business consists of maintenance, repairs and upgrades, among other things such as logistics management. While the smallest of Boeing’s three segments by revenue, it punches far above its weight in terms of profitability. On the call, CFO Jay Malave said that “both commercial and government businesses delivered double-digit margins in the quarter.” The segment received $5 billion in orders and exited the quarter with $33 billion backlog. (Jim Cramer’s Charitable Trust is long BA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. 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