雅虎香港財經 Boeing (BA) Wins $212M Deal to Aid F/A-18 E/F & EA-18G Jets
The Boeing Company BA recently clinched a contract involving its F/A-18 E/F and EA-18G aircraft. The award has been provided by the Naval Supply Systems Command Weapon Systems Support, Philadelphia, PA.
Details of the Deal
Valued at $212 million, the contract is expected to be completed by December 2028. Per the terms of the deal, Boeing will provide for the repair of 11 various configurations of flight control surfaces used on the F/A-18 E/F and EA-18G jets.
Majority of the work related to this deal will be executed in Jacksonville, FL.
What’s Favoring Boeing?
Of late, military aircraft have been gaining prominence and significant traction globally due to the advancements of new tactical, logistical and other important features, as well as the ongoing conflicts.
To this end, it is imperative to mention that Boeing’s F/A-18 Block III Super Hornet has the ability to perform virtually every mission in the tactical spectrum, including air superiority, day/night strike with precision-guided weapons, fighter escort, close air support, suppression of enemy air defenses, maritime strike, reconnaissance, forward air control and tanker missions.
On the other hand, the EA-18G Growler, a variant of the combat-proven F/A-18F, is the most advanced airborne electronic attack (AEA) platform and the only one in production today. It provides tactical jamming and electronic protection to U.S. military forces and its allies.
Such remarkable features of these jets must have been ushering in solid contract flows for Boeing, involving the production and associated parts repair of these jets. The latest contract win is a testament to that.
What Lies Ahead?
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. This must have prompted the Morder Intelligence firm to project a CAGR of 3.7% for the global fighter aircraft market in the 2024-2029 period.
Such projections indicate immense growth opportunities for prominent combat jet manufacturers like Boeing. Notably, the company’s Defense, Space & Security segment engages in the research, development, production and modification of manned and unmanned military aircraft. BA’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.
To this end, it is imperative to mention that Boeing expects approximately 30% of the worldwide fleet of military aircraft to be retired and replaced over the next 10 years, thereby driving increased demand for services to maintain aging aircraft and enhance aircraft capability. This, along with the solid growth opportunities offered by the fighter aircraft market, should significantly boost Boeing’s operational results, considering its wide combat jet portfolio.
Opportunities for Peers
Considering the aforementioned discussion, a few other defense contractors that can also be expected to gain substantially on virtue of their strong presence in the fighter aircraft market are discussed below.
Embraer’s ERJ 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.
The Zacks Consensus Estimate for ERJ’s 2024 sales indicates an improvement of 20.1% from the 2023 reported figure. Its shares have risen 81.2% in the past year.
Lockheed LMT is one of the pioneers in the combat aircraft space that has been designing and building combat-proven military aircraft for more than 100 years. Its product portfolio comprises some of the most advanced military aircraft like the F-35, C-130J Super Hercules, F-16 Fighting Falcon, F-22 Raptor and a few more.
LMT boasts a long-term earnings growth rate of 4.1%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 3.2% from the 2023 reported figure.
Airbus Group’s EADSY 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. For more than 40 years, Airbus has also been providing its customers with an extended portfolio of military aircraft services, ranging from the training of Flight and Ground Crews to live firing exercises anywhere around the world.
EADSY boasts a long-term earnings growth rate of 17.9%. The Zacks Consensus Estimate for 2024 sales implies growth of 8.2% from the 2023 reported figure.
Price Performance
In the past six months, shares of BA have lost 33.2% compared with the industry’s 9.4% decline.
Image Source: Zacks Investment Research
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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