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Boeing Secures $9M Air Force Deal to Modify F-15 Program

Zacks Equity Research

The Boeing Company BA recently clinched a modification contract for the Low-Rate Initial Production of F-15 Advanced Display Core Processor II (ADCPII). Work related to the deal is scheduled to be over by Dec 28, 2021.

Details of the Deal

Valued at $91.3 million, the contract was awarded by the Air Force Life Cycle Management Center, Wright-Patterson AFB, Ohio. Per the terms of the deal, Boeing will provide for the production and integration of the ADCPII boxes into the F-15 platform.

Work related to this project will be executed at St. Louis, MI.

A Brief Note on F-15

Boeing’s F-15 Strike Eagle is a twin-engine, all-weather tactical fighter aircraft. Its proven design is unbeatable in air-to-air combat, with more than 100 aerial combat victories.

What’s Favoring Boeing?

With rising security threats across the globe, the developing economies like India, Qatar and a few more along with the developed nations like the United States and Europe are ramping up their arsenal. Being the largest jet maker, Boeing thus enjoys a smooth flow of contracts for military jets and its associated upgrades. The latest contract win is a bright example to the same.

These contract wins are providing a significant boost to the company’s defense business. Evidently, in fourth-quarter 2018, revenues at its defense segment — Boeing Defense, Space & Security (BDS) — increased a solid 16% year over year to $6.11 billion.

As Boeing’s key forte has been combat-proven aircraft and the global geo-political tension is on the rise, it has higher chances of winning military-jet related contracts from the Pentagon like the latest one.

Price Movement

In a year’s time, shares of Boeing have surged about 18.5% compared with the industry’s 0.6% rise.

Zacks Rank & Other Key Picks    

Boeing currently sports a Zacks Rank #1 (Strong Buy). A few other prospective players in the same sector are AeroVironment, Inc. AVAV, Heico Corporation HEI and Hexcel Corporation HXL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment’s long-term growth estimate currently stands at 25%. The Zacks Consensus Estimate for 2019 earnings has moved 16.67% north to $1.75 over the past 90 days.

Heico Corporation delivered average positive earnings surprise of 4.8% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.9% to $2.14 over the past 90 days.

Hexcel Corp’s long-term growth estimate currently stands at 10%. The company delivered average positive earnings surprise of 0.7% in the last four quarters.

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