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Boeing Wins $118.6M DoD Contracts

Zacks Equity Research

Aerospace giant The Boeing Co. (BA) won four contracts from the U.S. Department of Defense (DoD) on Sep 25, 2013 with a total value of $118.6 million.

Per the first contract, worth $57.4 million, Boeing achieved a delivery order under a previously awarded performance based logistics contract to supply various parts required for the repair of the AV-8 aircraft for the Navy. Work on this contract will be performed in St. Louis, Mo. with deliveries scheduled to be completed by Sep 30, 2014.

The second contract calls for Boeing to perform non-recurring engineering, fabrication, inspection, and testing work on 10 pre-production Operational Test Program Sets to be used on the EA-18G Growler electronic warfare aircraft. With a value of $41.8 million, this contract is a cost-plus-fixed-fee delivery order that runs through Aug 2018. Work on this contract will be performed in St. Louis, Mo.

The next contract, worth $9.7 million, is a cost-plus-fixed-fee delivery order to provide the necessary services to assess and dispose of non-avionics systems on the T-45 Subsystems Service Life Assessment Program. This would ensure that the T-45 Goshawk training jet planes remain operational through their expected life expectancy of 2035. This operation should be completed by July 2016.

Lastly, Boeing achieved an approximately $9.7 million contract to supply 100 additional composite horizontal stabilators (CHS) and one tool string to the U.S. Army. This is a firm-fixed-price, non-option-eligible, non-multi-year modification contract.

The series of defense contracts proves that the defense behemoths are to some extent immune to the threat of sequestration. Defense players like Boeing, Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC) and Raytheon Co. (RTN) are doing well even in trying times. Small contracts doled out by the DoD have kept alive the revenue stream of these companies.

Boeing presently retains a short-term Zacks Rank #3 (Hold). Among the stocks worth considering in the defense space are Zacks Ranked #2 (Buy) Lockheed Martin and Northrop Grumman.

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