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Boeing (BA) Wins $200M Contract to Support F/A-18E/F Aircraft

The Boeing Company BA clinched a modification contract involving F/A-18E/F aircraft. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $200 million, the contract is expected to be completed by June 2025. Per the terms of the deal, Boeing will procure critical long lead material and associated efforts to support maintenance of the full rate production timeline for the congressionally added F/A-18E/F aircraft.

A major portion of the work related to this deal will be carried out in El Segundo, CA.

What’s Favoring Boeing?

Boeing, one of the major players in the defense business, stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. Furthermore, the company's expertise lies in a wide variety of aircraft components, repairs and modification-related programs.

Notably, its Defense, Space & Security segment’s portfolio has fixed-wing military aircraft, including F/A-18E/F Super Hornet, F-15 programs, P-8 programs, KC-46A Tanker and T-7A Red Hawk.

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BA's combat-proven aerospace programs and associated services, along with the rapidly growing need for military aircraft due to heightened geopolitical uncertainties worldwide, have resulted in a solid inflow of orders from the Pentagon. The latest contract win is an example of that. Such strong order flows are expected to boost the defense business segment’s top line.

Growth Prospects

With the United States being the world’s largest weapons exporter, the nation has been spending amply on defense products. Boeing, a prominent jet maker, therefore enjoys a dominant position in the combat aircraft market.

Per a Mordor Intelligence report, the global fixed-wing military aircraft market is expected to witness a CAGR of 6.5% during 2022-2028. North America constitutes the largest share of the aforementioned market.

Such developments can be attributed to a rise in global threats and geopolitical instabilities as well as increased defense spending. These projections are expected to benefit Boeing, along with other U.S.-based combat jet manufacturers like Northrop Grumman NOC, Lockheed Martin LMT and Textron TXT.

Since its inception, Northrop Grumman has been a pioneer in the development of combat manned aircraft. The company has a tradition of providing technological leadership in all aspects of military aviation and aircraft, such as manned, unmanned, targeting, surveillance and aircraft self-protection systems that enable warfighters to accomplish missions anytime and anywhere, under any condition.

NOC boasts a long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for the company’s 2023 sales implies a 4.7% improvement from that reported in 2022.

Lockheed’s Aeronautics business segment is engaged in the research, design, development, manufacturing, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies. Its major programs include F-35, C-130 Hercules, F-16 Fighting Falcon and F-22 Raptor jets.

LMT boasts a long-term earnings growth rate of 6.2%. The company delivered a four-quarter average earnings surprise of 7.46%.

Textron’s business unit Textron Aviation Defense designs, builds and supports versatile and globally-known military aircraft, preferred for training and attack missions. The unit’s military trainer and defense aircraft includes the T-6 trainer, which has been used to train pilots from more than 20 countries, and the AT-6 light attack military aircraft.

TXT boasts a long-term earnings growth rate of 11.2%. The Zacks Consensus Estimate for the company’s 2023 sales implies a 7.2% improvement from the previous year’s reported figure.

Price Movement and Zacks Rank

Shares of Boeing have risen 48.1% in the past year against the industry’s decline of 7.6%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Northrop Grumman Corporation (NOC) : Free Stock Analysis Report

Textron Inc. (TXT) : Free Stock Analysis Report

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