The Boeing Company (BA - Analyst Report) announced a contract extension with its existing customer Intelstat S.A. Common Shares (I - Snapshot Report). As per the renewed agreement, Boeing will manufacture four additional 702MP satellites for an undisclosed amount. This will establish its reputation as the initial builder of Intelstat’s advanced satellite fleet, Intelsat EpicNG. Intelsat offers satellite communication services globally.
Boeing initially received a four-year contract in Jul 2009 which included building two geo-stationary satellites and two spacecrafts of C- and Ku-band capacity that would provide network, video and voice services worldwide. The 702 MP’s will supply reliable, affordable and greater data transmissions to customers.
The first EpicNG satellite, Intelstat 29e is the last one from the prior contract and is still in production. It is expected to be launched in 2015. This will serve the Americas and North Atlantic. Intelstat 29e will be followed by Intelstat 33e from the new contract, scheduled to be launched in 2016.
Of late, Boeing has been expanding its telecommunication satellites business. In Apr 2013, the company announced to build a series of low-cost small satellite prototypes named Phantom Phoenix. The satellites will perform various task varying from intelligence, surveillance and reconnaissance to planetary sciences.
Going forward, Boeing’s prospects from this business segment look encouraging given the substantial orders booked especially from its foreign clients. At the end of first quarter 2013, the company had total backlog orders worth $68.0 billion with 42% coming from overseas customers.
A major overhang on the stock was also removed when the U.S. Federal Aviation Administration (“FAA”) approved the redesigned battery of the 787 Dreamliner in the first quarter.
However, the uncertainties surrounding defense cutbacks might prove unfavorable for Boeing’s future growth objectives as a major part of its operations is tied to the U.S. defense sector. Currently, the company carries a Zacks Rank #3 (Hold).
Aerospace and defense operators currently performing well include Northrop Grumman Corporation (NOC - Analyst Report) and Wesco Aircraft Holdings Inc. (WAIR - Snapshot Report). The stocks are presently well positioned with a Zacks Rank #2 (Buy).
Based in Chicago, IL, Boeing along with its business wings is engaged in the design, development, manufacture, sale, and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide.