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Boeing (BA) Secures Navy Deal to Support P-8A Combat Jets

The Boeing Company BA recently clinched a contract involving the P-8A aircraft. The Naval Air Systems Command, Patuxent River, MD has provided the award.

Details of the Deal

Valued at $20.7 million, the contract is expected to be completed by September 2023. Per the terms, Boeing will offer logistics management, product support analysis and integration, maintenance planning, technical data, support equipment maintenance, and engineering services to support the P-8A aircraft.

The contract will cater to the U.S. Navy and the governments of Australia, Norway and the United Kingdom. The majority portion of the work related to this deal will be executed in Jacksonville, FL, Whidbey Island, WA and Sigonella, Italy.

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

Growth Prospects

With rising security threats across the globe, emerging economies like the Asia Pacific, the Middle East and South America are spending a lot on enhancing their defense arsenals. Meanwhile, developed nations like the United States and Europe have already been leading the defense market. With the United States being the largest worldwide weapons exporter, the nation has been spending amply on defense products. Boeing,  the largest aircraft manufacturer in the United States, thus enjoys a dominant position in the combat aircraft market.

Per a Mordor Intelligence report, the global combat aircraft market is expected to witness a CAGR of 2.5% during the 2021-2026 time period, with North America constituting the largest share of this market. Such growth can be attributed to a rise in global threats and geopolitical instabilities and increased spending on defense. These projections should 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 manned aircraft for combat. Northrop Grumman also 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 conditions.

Northrop Grumman has a long-term earnings growth rate of 2.2%. The Zacks Consensus Estimate for NOC’s 2022 sales implies an improvement of 1.9%.

Lockheed’s Aeronautics business segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgradation 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.

Lockheed Martin boasts a long-term earnings growth rate of 5.4%. The stock has gained 20.8% in the past year.

Textron’s business unit, Textron Aviation Defense, designs, builds and supports versatile and globally-known military aircraft, preferred for training and attack missions. Some of Textron’s renowned products include Beechcraft T-6C trainer and AT-6 Wolverine.

Textron boasts a long-term earnings growth rate of 12.5%. The Zacks Consensus Estimate for TXT’s 2022 sales implies an improvement of 6% from the 2021 reported figure.

Price Movement

Shares of Boeing have lost 37.4% in the past 12 months compared with the industry’s decline of 34.9%.

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Zacks Rank

Boeing currently has 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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