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Boeing (BA) Wins $24.5M Contract to Support MQ-25 Production

The Boeing Company BA recently clinched a $24.5-million contract to support MQ-25 low-rate initial production. Per the deal, Boeing will provide non-recurring engineering services for addressing product baseline obsolescence involving MQ-25 low-rate initial production.

The work related to the deal will be performed at multiple locations across the United States. The contract, which is expected to be completed by July 2023, has been awarded by the Naval Air Systems Command, Patuxent River, MD.

Significance of MQ-25

The MQ-25 unmanned aircraft system has been designed for the U.S. Navy mission. It provides the needed robust refueling capability, thereby extending the combat range of deployed Boeing F/A-18 Super Hornet, Boeing EA-18G Growler and Lockheed Martin F-35C fighters.

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The MQ-25 brings the right combination of refueling, autonomy and seamless carrier deck integration to meet the U.S. Navy’s goals.

What’s Favoring Boeing?

Boeing is a leading company in the air refueling aircraft market. BA has a proven record of bringing innovative and reliable tanker aircraft. The air refueling aircraft market is expected to increase by leaps & bounds in the days ahead, buoyed by increasing military missions and the requirement for extended-range operations.

Per the report from Markets and Markets, the air-to-air refueling market is expected to witness a CAGR of 10% by 2027.

Such abounding growth prospects are expected to aid Boeing’s position in the air refueling aircraft market. Its expertise in aircraft designing, production and maintenance services gives it a competitive edge to prosper in the growing demand. This supports its position as a leading player in the air refueling aircraft market.

Moreover, with the major defense budget increase worldwide to modernize and upgrade the defense structure, as well as increased air missions, the air refueling aircraft market is expected to witness a northward trend. In such a scenario, BA’s strategy to grow in the market by bringing more advanced and cost-effective air refueling systems is expected to boost its growth trajectory in the air refueling aircraft market.

Growth Prospects

As nations increase their defense spending to strengthen their warfare capabilities, the air refueling aircraft market may also witness increased demand, signifying strong prospects for Boeing and defense majors like Airbus EADSY and Lockheed Martin LMT.

Airbus’ A330 MRTT is one of the most capable new-generation air refueling aircraft, which is combat-proven and comes with unique multi-role capabilities. Its strong demand can be gauged by orders from Australia (as a launch customer), France, NATO, Saudi Arabia, Singapore, South Korea, the United Arab Emirates and the UK.

Airbus boasts a long-term earnings growth rate of 12.4%. Shares of EADSY have delivered 15.5% in the past six months.

Lockheed Martin’s Aeronautics unit has more than 50 years of expertise in delivering the world’s best Tactical Aerial Refueling platform. It provides the C-130 Air-to-Air Refueling Tanker Conversion Kit, which can deliver fuel simultaneously to two receiver aircraft at a rate of up to 221 gallons per minute.

Lockheed Martin’s long-term earnings growth rate is pegged at 6.9%. LMT shares have increased 11.8% in the past year.

Price Performance

Shares of Boeing have rallied 24.7% in the past six months against the industry’s fall of 0.9%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

Boeing carries a Zacks Rank #3 (Hold). A better-ranked stock from the same industry is Safran SAFRY, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Safran boasts a long-term earnings growth rate of 40.4%. The Zacks Consensus Estimate for 2023 earnings indicates a whopping increase of 166.7% from the 2023 estimated figure.

The Zacks Consensus Estimate for SAFRY’s 2023 sales suggests a growth rate of 32% from the 2022 estimated figure.

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The Boeing Company (BA) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Safran SA (SAFRY) : Free Stock Analysis Report

Airbus Group (EADSY) : Free Stock Analysis Report

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