It certainly is! A baby has just been born. Is it a boy or a girl? It's a boy! What made you think it wasn't correct?

The pronoun "it" can be used to refer to a person or animal whose sex is unknown or not considered. Examples I don't know who it is. Is it a boy or a girl? It's a boy! Is it a dog or a human? It's a man.

It sure is. There's a subject and a predicate. No confusion whatsoever.