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Bell-Boeing JV Wins $16M Contract to Support MV-22 Program

Zacks Equity Research
·4 mins read

Bell-Boeing, a joint venture (JV) between The Boeing Company BA and Bell Helicopter — a unit of Textron Inc. TXT, recently secured a modification contract for procuring 24 additional MV-22 integrated aircraft survivability equipment A-Kits. Work related to the deal is scheduled to be completed by April 2024.

Valued at $16.4 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Through this deal, the JV will also provide additional non-recurring engineering support to integrate the control indicator unit replacement into the existing Department of Navy large aircraft infrared countermeasures system.

Jet Demand & V-22 Jets

A rapid increase in terror attacks has compelled nations to strengthen their arsenal and bump up defense budget. With the United States being the largest exporter of defense equipment across the world, the nation enjoys a steady flow of contracts for its combat-proven weaponries from both Pentagon and its foreign allies. With military jets and helicopters constituting a major portion of a nation’s armaments, there is a steady flow of contracts for these weaponries.

Notably, Bell-Boeing’s primary product, V-22 Osprey is a family of multi-mission, tiltrotor military aircraft with both vertical as well as short takeoff and landing capabilities. It is designed to combine the functionality of a conventional helicopter with long-range, high-speed cruise performance of a turboprop aircraft. Notably, MV-22 and CV-22 are two variants of the V-22 family of jets.

Apart from its wide usage domestically, this family of tiltrotors has been deployed in numerous missions overseas including casualty evacuation, tactical recovery of aircraft and personnel, humanitarian assistance/disaster relief, resupply, VIP transport along with theater security cooperation. No doubt with growing demand for military aircraft these tiltrotors enjoy a decent demand pool across the globe.

How Will the Deal Aid Textron?

Textron's Bell segment is one of the leading suppliers of advanced military helicopters to the U.S. government and military customers outside the United States and secures pivotal contracts like the latest one. Apart from supplying helicopters, the segment also provides invaluable support to offshore petroleum exploration and development, emergency medical helicopter operators, and foreign governments.

Impressively, amid the coronavirus-led uncertainty, Bell segment’s revenues recorded solid 6.6% year-over-year growth in the second quarter of 2020. This indicates that its products still enjoy solid demand in the defense space and will continue to boost its growth trajectory. The latest contract win is yet another testament to that.

Looking Ahead

Per a forecast made by Fortune Business Insights, the global military aircraft market size is projected to reach $58 billion by 2026 from 2018, at a CAGR of 3.1%. This surely is going to benefit major U.S. combat aircraft manufacturers like Bell-Boeing, Lockheed LMT and Northrop Grumman NOC, with North America dominating this market space.

Price Movement & Zacks Rank

Textron’s stock has lost 25.2% in the past year compared with the industry’s decline of 33.8%.

Boeing’s shares have lost 56.3% in the past year compared with the industry’s decline of 33.8%.

While Textron currently carries a Zacks Rank #3 (Hold), Boeing has a Zacks Rank #4 (Sell).

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

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