Boeing’s decision to unload three aerospace businesses initially left Bank of America questioning the logic, but the bank now sees the deal as a way for the plane maker to sharpen its focus without abandoning the technologies it helped develop.
Boeing (BA) agreed on Aug. 10 to sell Wisk Aero, Insitu, and SkyGrid to Archer Aviation, giving the electric-aircraft company a collection of autonomous-flight, unmanned-aircraft, and air-traffic technology businesses.
Archer Aviation (ACHR) said the transaction would broaden its aerospace and defense platform while making Boeing a strategic shareholder and partner.
BofA changes its view on Boeing’s deal
Bank of America analyst Ronald Epstein called the transaction a “head scratcher at first” in a note given to TheStreet, but said the firm came away encouraged after looking more closely at what Boeing receives and what it gives up.
Boeing is expected to receive shares equal to 19.75% of Archer’s outstanding Class A stock at closing, subject to certain adjustments. The agreement also includes two warrants representing up to $200 million of additional Archer stock, with exercise prices of $13 and $17.88 per share, according to an Archer filing with the Securities and Exchange Commission.
That structure gives Boeing a sizable economic interest in the combined business, even after it hands over day-to-day control. Boeing and Archer also agreed to an intellectual-property cross-license, allowing Boeing to retain access to technology associated with Wisk, Insitu, and SkyGrid.
Epstein sees the combination as a way for Boeing to shed relatively high-cost businesses that sit outside its most important priorities while still maintaining exposure to its long-term potential. In the note, he said the divestitures should also eliminate distractions from Boeing’s other major programs.
Boeing could clear room for a bigger aircraft bet
BofA’s more interesting takeaway centers on where Boeing can put those freed-up resources, with Epstein pointing to both current production priorities and a potentially much larger aircraft project down the road.
The analyst said Boeing should be able to concentrate more heavily on ramping production of the 737 and 787 while continuing work on its space platforms and the F-47 fighter program.
Boeing has already been trying to increase output of its most important commercial aircraft. The company said in its second-quarter results that the 737 program began transitioning toward a production rate of 47 aircraft per month, while its commercial-airplane backlog stood at more than 6,200 jets valued at a record $597 billion.
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BofA also sees a more speculative possibility further down the road. Epstein said removing the non-core assets could create capacity for Boeing to focus innovation on a new midsize airplane, potentially something resembling the long-discussed 797 or a blended-wing-body aircraft.
That possibility adds another layer to a transaction that initially appears to pull Boeing away from some advanced aviation projects. BofA instead sees a company narrowing where it puts its resources while keeping a financial and technological connection to the businesses it is selling.
BofA keeps its bullish Boeing stock outlook
Bank of America maintained its Buy rating and $270 price objective on Boeing, representing 15.5% upside from the $233.69 share price used in the Aug. 10 note.
The bullish rating comes with some near-term caution. BofA lowered its 2026 revenue estimate to $98.82 billion from $99.33 billion and widened its expected loss to $1.25 per share from 85 cents per share.
Epstein said the $270 target is based on normalized free cash flow of $11 per share and a valuation premium to the S&P 500. BofA believes that premium reflects strong demand for commercial jets and the expected ramp-up of the F-47 program.
The Archer deal fits into that thesis by narrowing Boeing’s operational focus while leaving it with meaningful exposure to the assets it is selling. If those businesses gain value under Archer, Boeing can participate through its equity stake and warrants while directing more attention toward the programs BofA believes should sit at the center of its strategy.
Related: New Boeing deal gives Archer something rivals don’t have
