Back to top

Image: Bigstock

Boeing (BA) Secures $250M Deal to Support LRSO Cruise Missile

Read MoreHide Full Article

The Boeing Company (BA - Free Report) recently won a $250 million contract to offer weapon system integration for the Long Range Stand-Off (LRSO) Cruise Missile. Work related to the deal is scheduled to be completed by Dec 31, 2024.

The contract was awarded by the Air Force Nuclear Weapons Center, Eglin Air Force Base, Florida. Per the terms of the deal, this aerospace giant will provide aircraft and missile carriage equipment development and modification, engineering, testing, software development, training, facilities and support necessary to fully integrate the LRSO Cruise Missile on the B-52H bomber platform.

Attributes of LRSO

The LRSO is a nuclear-armed air-launched cruise missile, under development. It is set to replace the current AGM-86 air launched cruise missile (ALCM). LRSO, might be up to about 50% longer than Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER) and still be suitable for internal carriage by the B-2 and B-52.

Our View

AGM-86 ALCM has been serving the U.S. Air Force quite efficiently. However, with increasingly sophisticated air defense systems developed by America’s nemeses, especially Russia, demand for a new stealth nuclear-armed cruise missile capable of either destroying these defenses or penetrating them has been increasing consistently. In this scenario, the LRSO comes as the most credible stealthy and low-yield option available to the United States (according to Strategic Studies Quarterly Report).

Boeing’s B-52, which has been the U.S. Air Force’s one of the most preferred bombers, is completely dependent on long-range cruise missiles and cannot continue in the nuclear mission beyond 2030 without LRSO.  As B-52 is expected to play a primary role in the U.S. nuclear mission for at least next decade and ALCM is already well beyond its originally planned end of life, we may expect more contracts similar to the latest one to usher in from the Pentagon in the coming days. This, in turn, should prove conducive to Boeing.

Price Performance

In a year’s time, shares of Boeing have gained about 16.5% against the industry’s 2.2% decline.

Zacks Rank & Other Key Picks    

Boeing currently sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the same sector are Spirit Aerosystems Holdings (SPR - Free Report) , Textron Inc. (TXT - Free Report) and HEICO Corporation (HEI - Free Report) . While Spirit Aerosystems sports a Zacks Rank #1, Textron and HEICO carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Spirit Aerosystems’ long-term earnings growth rate is projected at 7.80%. The Zacks Consensus Estimate for 2019 earnings has moved 3.7% north to $7.56 over the past 90 days.

Textron delivered average positive earnings surprise of 19.61% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has climbed 4.3% to $3.67 over the past 60 days.

HEICO Corporation’s long-term earnings growth rate is projected at 12.10%. The Zacks Consensus Estimate for 2019 earnings has moved 7% up to $2.14 over the past 90 days.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>

Published in