Singapore markets close in 7 hours 21 minutes
  • Straits Times Index

    -9.45 (-0.28%)
  • Nikkei

    -427.89 (-1.09%)
  • Hang Seng

    -126.43 (-0.67%)
  • FTSE 100

    -31.10 (-0.37%)
  • Bitcoin USD

    -1,744.23 (-2.51%)
  • CMC Crypto 200

    -34.71 (-2.31%)
  • S&P 500

    -39.17 (-0.74%)
  • Dow

    -605.78 (-1.53%)
  • Nasdaq

    -65.51 (-0.39%)
  • Gold

    -2.10 (-0.09%)
  • Crude Oil

    +0.03 (+0.04%)
  • 10-Yr Bond

    +0.0410 (+0.92%)
  • FTSE Bursa Malaysia

    -10.30 (-0.63%)
  • Jakarta Composite Index

    +36.34 (+0.51%)
  • PSE Index

    0.00 (0.00%)

Boeing (BA) Wins $112M Deal to Aid F/A-18 & EA-18G Aircraft

The Boeing Company BA recently clinched a contract for its F/A-18 and E/A-18G aircraft. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $111.9 million, the contract is expected to be completed by May 2028. Per the terms of the deal, Boeing will be engaged in the production and delivery of avionics long lead time parts and spares related to the F/A-18E/F Block III and E/A-18G aircraft. These spares will support the advanced crew station suite, life of type buys for parts that have or will become obsolete, and special test equipment for aiding the aforementioned jets.  

Majority of the work related to this deal will be performed at Berkley, MO, Haifa, Israel and Merrimack, NH. The contract will support the U.S. Navy, Royal Australian Air Force, and the country of Kuwait.

What’s Favoring Boeing?

Nations across the globe are reinforcing their military capabilities to strengthen their defense structure in the growing threat environment worldwide. In this context, military aircraft that play a critical role in military missions have also been witnessing a significant rise in demand.

To this end, it is imperative to mention that Boeing’s F/A-18 Block III Super Hornet, the backbone of the U.S. Navy, is a combat aircraft that delivers cutting-edge, next-generation multi-role strike fighter capability. The EA-18G Growler, a variant of the F/A-18F, provides tactical jamming and electronic protection to the U.S. military forces and allies around the world.

In 2023, Boeing successfully delivered 22 F/A-18 models. With this, one can gauge the solid demand that these jets enjoy in the military aircraft market. The latest contract is another testament to that. Such contract wins tend to boost the company’s operating results from the Boeing Defense, Space & Security segment, which ended 2023 with a backlog of $59.01 billion.

Growth Prospects

Rising military conflicts, terrorism, border disputes, territory invasions and violations have forced nations to increase their defense spending toward procuring combat-proven aircraft to enhance their aerial security in recent times. Per a report from the Expert Market Research firm, the global military aircraft market is estimated to witness a CAGR of 5.10% in the 2024-2032 period.

Such projections indicate immense growth opportunities for prominent combat jet manufacturers like Boeing. The company’s military jet portfolio includes the F-15, P-8, T-7A Red Hawk and C-17 Globemaster III, apart from the F/A-18 and E/A-18G aircraft. On Feb 29, 2024, Boeing secured a $3.4 billion contract from the U.S. Navy for 14 P-8A Poseidon aircraft for the Royal Canadian Air Force and three additional P-8s for the German Navy.

Opportunities for Peers

A few other defense players that can gain from the expanding military aircraft market are Embraer ERJ, Lockheed Martin LMT and Airbus Group EADSY.

Embraer’s Defense & Security is a prominent player within the aerospace and defense industry of Latin America. Its product portfolio includes the A-29 Super Tucano light attack and advanced trainer and the C-390 Millennium military multi-mission aircraft. In February 2024, Embraer signed a Memorandum of Understanding with Mahindra to provide the Indian Air Force with the C-390 Millennium.

ERJ boasts a long-term (three-to five-years) earnings growth rate of 17%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 19.2% from the 2023 reported figure.

Lockheed is one of the pioneers in the combat aircraft space, with its product portfolio constituting some of the most advanced military aircraft like the F-35, C-130, F-16, F-22 and a few more. The Aeronautics segment ended 2023 with a backlog of $60.16 billion. The F-35 Lightning II, an international multi-role stealth fighter, comprised 64% of the segment’s total sales.

LMT boasts a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 2.7% from the 2023 reported figure.

Airbus Group’s military aircraft consists of the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most advanced swing-role fighter ever conceived. As of Mar 31, 2024, Airbus had 1,445 military aircraft in operation globally.

EADSY boasts a long-term earnings growth rate is 12.4%. The Zacks Consensus Estimate for 2024 sales implies growth of 9.5% from the 2023 reported figure.

Price Performance

In the past month, shares of BA have lost 4.9% compared with the industry’s 5.7% decline.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank

Boeing currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report

Airbus Group (EADSY) : Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research