Boeing (BA) Wins Deal to Support P-8A Production Aircraft

·3 min read

The Boeing Company BA recently secured a modification contract involving P-8A aircraft. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Valued at $30.4 million, the contract is expected to be completed by January 2026. Per the terms of the deal, Boeing will procure eight P-8A aircraft mechanisms as ancillary equipment to support P-8A aircraft production.

The work related to this deal will be carried out in Seattle, WA.

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

Growth Prospects

With rising security threats across the globe, emerging economies like South America, the Asia Pacific and the Middle East are spending a lot on enhancing their defense arsenals. Meanwhile, other nations like Europe and the United States 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, enjoys a dominant position in the combat aircraft market.

Per a Mordor Intelligence report, the global defense aircraft market is expected to witness a CAGR of 2.5% during 2021-2026, 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 defense spending. 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 combat aircraft. It 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.

NOC has a long-term earnings growth of 3.5%. The Zacks Consensus Estimate for the company’s 2023 sales implies a 4.6% improvement from the year-ago reported figure.

Lockheed’s Aeronautics business segment is engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, 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.

LMT boasts a long-term earnings growth of 6.9%. The stock boasts a four-quarter average earnings surprise of 6.86%.

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 its renowned products include the Beechcraft T-6C trainer and AT-6 Wolverine.

TXT boasts a long-term earnings growth of 11.2%. The Zacks Consensus Estimate for the company’s 2023 sales implies an 8.1% improvement from the year-ago reported figure.

Price Movement

Shares of Boeing have gained 3.5% in the past year against the industry’s 15.7% decline.

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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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