The Boeing Co. (BA - Free Report) recently announced that it is one of the six companies to receive the Aerospace Systems Air Platform Technology Research program contract from the U.S. Air Force, which has a ceiling value of $499 million.
Notably, Boeing is the final company to receive this award from Pentagon.
Per the contract, the company will be responsible for providing quality research for affordable, revolutionary capabilities for the warfighter. It was awarded by Air Force Research Laboratory, Wright-Patterson Air Force Base, OH.
Boeing expects to complete the task by Aug 31, 2025. The work will be carried out at the company’s Hazelwood, MS facility, and will utilize the fiscal 2017 research and development funds to finish the task.
Boeing is one of the major players in the defense business and stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. In particular, among other defense equipments the company’s key forte has been combat-proven aircraft. It also started developing military aerial refueling and strategic transport aircraft, of late.
Notably, with its proven expertise in aerospace programs, Boeing has been consistently securing a huge number of contracts from the Pentagon.
For instance, in August, the company clinched a contract valued at $323.5 million, to supply spare parts of F/A-18 A-F and F/A-18 aircraft from the Defense Logistics Agency Aviation.. Again, it won a modification contract, valued at $222.5 million, for eight CH-47F new build helicopters. The deal aims to support the Royal Saudi Land Forces Aviation Command. To this end, we expect the recently won contract to add further impetus to the company’s growth trajectory.
Moreover, the proposed budget hike for fiscal 2018 by President Trump reflected a 10% increase over the current base budget level of the current year, hinting at the U.S. government to spend more on defense primes like Boeing, Lockheed Martin Corp. (LMT - Free Report) , Northrop Grumman Corp. (NOC - Free Report) , Raytheon Company (RTN - Free Report) and others.
Further, the U.S. House of Representatives have passed the 2018 defense policy bill recently, reflecting an expenditure level of $696 billion. The figure easily surpassed the nation’s current spending caps, which enacted in 2011, limited annual military spending to $549 billion. It also exceeded President Trump’s defense budget request proposed this March.
If enacted, all these budgetary updates are expected to immensely boost this defense prime’s, along with others’, business growth in the near term.
Shares of Boeing have surged 76.9% over the last 12 months, outperforming the broader industry’s gain of 37%. This might have been driven by the company’s strong balance sheet and cash flows that provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Boeing currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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