Yahoo Finance Boeing (BA) Wins $1.2B Deal to Supply Missiles & Spare Parts
The Boeing Company BA recently won a modification contract involving missile systems and associated spares. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
The contract, valued at $1.17 billion, is expected to get completed by March 2029. Per the terms of the deal, Boeing will supply 400 RGM-84L-4 Harpoon Block II Update (HIIU) Grade B canister tactical missiles, four RTM-84L-4 Block II HIIU Grade B canister exercise missiles, 411 containers, four blast test vehicles and two Harpoon Weapon System Joint Common Test Sets (JCTS).
The jet giant will also deliver Harpoon Coastal Defense System (HCDS) spares, weapon station support equipment, JCTS spares and missile spares. It will also provide HCDS training equipment, integrated logistics support and technical publications, field service representatives and training.
A major portion of work related to this deal will be executed in McKinney, TX and Pontiac, MI.
Benefits of the Deal
Increasing geopolitical tensions worldwide have prompted nations to further strengthen their defense systems. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. With the United States being the world’s largest weapon supplier and Boeing being a prominent U.S. missile maker, the increased missile defense adoption by the nations provides the company with solid growth opportunities.
Notably, Boeing’s Defense, Space & Security segment engages in the research, development, production and modification of products and related services, including strategic missile and defense systems. Its Harpoon missile is the world’s most successful anti-ship missile and is in service with the armed forces of more than 30 countries.
Harpoon missiles have been upgraded over the years and are now available as the Harpoon Block II. Some other missiles in Boeing’s product portfolio include the supersonic Bomarc missile, Thor missile, AGM-86B/C Air Launched Cruise Missile and GAM-77 Hound Dog Missile.
With such advanced weaponry in its portfolio, Boeing enjoys solid demand in the defense space. The latest contract is a bright example of that, which, in turn, should boost its top-line growth.
Growth Prospects
Nations have increased their defense spending on military equipment and various arsenals to strengthen their defense capabilities. The surge in demand for defense products is primarily due to rising geopolitical tensions and amplified terrorist threats. Hence, military missiles, an integral part of any defense system, have registered a steady growth in demand.
Per the report from Mordor Intelligence, the missiles and missile defense system market is projected to witness a CAGR of 4.9% from 2022-2027. Such abounding growth trends indicate ample development opportunities for Boeing as it enjoys a lucrative position in the missile market.
A few defense primes that can reap the benefits of the aforementioned market are Northrop Grumman NOC, Raytheon Technologies RTX and Lockheed Martin LMT.
Northrop Grumman designs and produces missile products, including advanced high-speed propulsion systems, fuses, warheads and controls for air, sea and land-based systems.
The company boasts a long-term earnings growth of 3.5%. The Zacks Consensus Estimate for NOC’s 2023 sales reflects an improvement of 4.6% from the 2022 reported figure.
Raytheon’s Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. The unit serves as a prime contractor or major subcontractor on numerous missile and related programs with the U.S. Department of Defense.
Raytheon’s long-term earnings growth is pegged at 8.3%. The Zacks Consensus Estimate for RTX’s 2023 sales indicates a 7.8% increase from the prior-year reported figure.
Lockheed Martin’s Missiles and Fire Control (MFC) is a recognized designer, developer and manufacturer of precision engagement aerospace and defense systems for the United States and allied militaries. MFC develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers. These include the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies.
LMT’s long-term earnings growth is pegged at 6.9%. Shares of the company have gained 4.4% in the past year.
Price Performance
Shares of Boeing have rallied 16.8% in the past year against the industry’s 8.9% decline.
Image Source: Zacks Investment Research
Zacks Rank
Boeing 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
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