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Boeing (BA) Secures $506M Contract to Support GMD System

·3 min read

The Boeing Company BA recently secured a contract worth $506.7 million involving Ground-Based Midcourse Defense (GMD) system. The award has been offered by the Missile Defense Agency, Huntsville, AL.

Details of the Deal

The contract is projected to be completed by Aug 31, 2027. With a maximum value of $5.02 billion, this contract requires Boeing to provide overall GMD Element engineering, integration, including physical and logical integration of the GMD Element and components, and GMD integration with the Missile Defense System.

Per this contract, Boeing will also have to perform day-to-day systems operations and readiness, routine maintenance functions, analysis related to GMD Element health and availability, and execute failure/fault checklists, as appropriate.

Work related to this deal will be executed in Huntsville, AL.

Significance of GMD

The GMD system is the United States' only operationally deployed missile defense program capable of defending the entire U.S. homeland (including Alaska and Hawaii) against long-range ballistic missile attacks. GMD is designed to detect, intercept and destroy long-range ballistic missiles during their midcourse phase of flight. The system provides early detection and tracking during the boost and midcourse phase, as well as target discrimination, precision intercept and destruction of the target through the force of the collision. GMD is an integral element of the U.S. Missile Defense Agency's layered ballistic missile defense architecture.

Prospects

Per a report by the Allied Market Research firm, the global rocket and missile market is projected to expand at a CAGR of 4.2% during the 2022-2031 period to reach $82 million by 2031. Such massive growth projections indicate solid opportunities for Boeing, which is the manufacturer of missile defense products, including Aegis Ballistic Missile Defense, Avenger and PAC-3 Missile Seeker. The rocket and missile market growth will also bolster other defense contractors like Raytheon Technologies RTX, Northrop Grumman NOC and Lockheed Martin LMT, which specialize in developing technologically advanced missiles.

Raytheon Technologies’ Missiles & Defense business unit is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. It produces missiles like AMRAAM, Stinger, Javelin, Patriot Gem-T missile and many more.

Raytheon boasts a four-quarter average earnings surprise of 10.53%. RTX stock has a long-term earnings growth rate of 10.4%.

Northrop Grumman’s missile defense program includes AGM-88E advanced anti-radiation guided missiles, the Ground-Based Strategic Deterrent weapon system and rocket propulsion systems.

Northrop boasts a four-quarter average earnings surprise of 2.2%. NOC stock has a long-term earnings growth rate of 31.2%.

Lockheed Martin’s missile defense program includes the Patriot Advanced Capability-3 (PAC-3) and Terminal High Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, Joint Air-to-Surface Standoff Missile as well as other tactical missiles.

Lockheed boasts a long-term earnings growth rate of 5.4%. LMT stock has risen 18.7% in the past year.

Price Performance

Shares of Boeing have rallied 10.3% in the past three months against the industry’s fall of 1.4%.

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Zacks Rank

Boeing carries 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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