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Boeing Wins $6.6B Deal to Aid US Missile Defense System
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The Boeing Company (BA - Free Report) recently secured a modification contract worth $6.6 billion for extending the Ground-based Midcourse Defense (“GMD”) development and sustainment contract (“DSC”). Performance related to the DSC contract modification will be executed through December 2023.
Details of the Deal
The deal was awarded by the Missile Defense Agency, Huntsville, AL. Boeing is the prime contractor and other subcontractors of this deal include Orbital ATK , Northrop Grumman Corp. (NOC - Free Report) and Raytheon Company who will work together in extending the DSC. Notably, the modification has taken the total cumulative face value of the contract to $12.6 billion.
Per the terms of the DSC, these contractors will aid in development, fielding, test, systems engineering, integration and configuration management, equipment manufacturing and refurbishment, training, and operations and sustainment for the GMD weapon system and associated support facilities.
Notably, the aforementioned modification provisions for the Missile Defense Agency to execute missile defense and defense enhancements to complete the accelerated delivery of a new missile field and procurement and deployment of 20 additional Ground Based Interceptors. This new field will be equipped with 20 additional silos and two additional silos in a previously constructed missile field at Fort Greely, Alaska.
Work under this modification includes technical capabilities for expanding and improving the nation’s missile defense system to ensure upgraded defensive capabilities by boosting vehicle (BV) development; integration of redesigned kill vehicle (RKV) with BV; providing GBI assets for labs and test events; development, integration, testing and deployment of ground systems software builds to address emerging threats; acquisition and emplacement of launch support equipment; expanded systems testing through all ground and flight testing; cyber security support; and, performance based logistics.
Work will be carried out at multiple locations across the United States at government designated sites as well as other contractor designated prime, subcontractor, and supplier operating locations. Fiscal 2017 and 2018 research, development, test and evaluation funds were utilized to partially finance the deal obligated at the time of award.
Our View
The series of missile-related feuds between the United States and North Korea, which has been hitting the headlines of the defense space all along the second half of 2017, has prompted the U.S. administration to further strengthen its missile power. We believe the latest contract won by Boeing is a bright example of that.
Apart from being the largest aircraft manufacturer in the world, Boeing is also one of the major players in the defense space. Notably, the company’s Defense, Space & Security business segment manufactures develops a varied number of defense related products like manned and unmanned military aircraft and weapons systems including missile systems. The segment is involved in prime defense related programs like GMD; satellite systems: commercial, civil and military satellites; and space exploration: Space Launch System, Commercial Crew and International Space Station.
In its recently reported quarterly result, the company’s defense business reflected a solid 5% revenue growth in the fourth quarter driven by higher weapon deliveries. Management projects 2018 defense revenues for Boeing in the $21.5-$22.5 billion range, to which we believe this latest contract, will contribute substantially.
With the Markets and Markets research firm projecting rocket and missile market to grow at a CAGR of 4.74% during 2017-2022 to a value worth $70 billion by 2022, scrumptious order flows like the recent one surely indicates at Boeing’ enhanced growth prospects in this market.
Price Movement
Boeing’s stock has rallied about 116.2% in a year, compared with the broader industry’s gain of 57.1%. The outperformance was primarily led by significant demand for its military jets along with robust worldwide demand for its commercial aircraft.
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Boeing Wins $6.6B Deal to Aid US Missile Defense System
The Boeing Company (BA - Free Report) recently secured a modification contract worth $6.6 billion for extending the Ground-based Midcourse Defense (“GMD”) development and sustainment contract (“DSC”). Performance related to the DSC contract modification will be executed through December 2023.
Details of the Deal
The deal was awarded by the Missile Defense Agency, Huntsville, AL. Boeing is the prime contractor and other subcontractors of this deal include Orbital ATK , Northrop Grumman Corp. (NOC - Free Report) and Raytheon Company who will work together in extending the DSC. Notably, the modification has taken the total cumulative face value of the contract to $12.6 billion.
Per the terms of the DSC, these contractors will aid in development, fielding, test, systems engineering, integration and configuration management, equipment manufacturing and refurbishment, training, and operations and sustainment for the GMD weapon system and associated support facilities.
Notably, the aforementioned modification provisions for the Missile Defense Agency to execute missile defense and defense enhancements to complete the accelerated delivery of a new missile field and procurement and deployment of 20 additional Ground Based Interceptors. This new field will be equipped with 20 additional silos and two additional silos in a previously constructed missile field at Fort Greely, Alaska.
Work under this modification includes technical capabilities for expanding and improving the nation’s missile defense system to ensure upgraded defensive capabilities by boosting vehicle (BV) development; integration of redesigned kill vehicle (RKV) with BV; providing GBI assets for labs and test events; development, integration, testing and deployment of ground systems software builds to address emerging threats; acquisition and emplacement of launch support equipment; expanded systems testing through all ground and flight testing; cyber security support; and, performance based logistics.
Work will be carried out at multiple locations across the United States at government designated sites as well as other contractor designated prime, subcontractor, and supplier operating locations. Fiscal 2017 and 2018 research, development, test and evaluation funds were utilized to partially finance the deal obligated at the time of award.
Our View
The series of missile-related feuds between the United States and North Korea, which has been hitting the headlines of the defense space all along the second half of 2017, has prompted the U.S. administration to further strengthen its missile power. We believe the latest contract won by Boeing is a bright example of that.
Apart from being the largest aircraft manufacturer in the world, Boeing is also one of the major players in the defense space. Notably, the company’s Defense, Space & Security business segment manufactures develops a varied number of defense related products like manned and unmanned military aircraft and weapons systems including missile systems. The segment is involved in prime defense related programs like GMD; satellite systems: commercial, civil and military satellites; and space exploration: Space Launch System, Commercial Crew and International Space Station.
In its recently reported quarterly result, the company’s defense business reflected a solid 5% revenue growth in the fourth quarter driven by higher weapon deliveries. Management projects 2018 defense revenues for Boeing in the $21.5-$22.5 billion range, to which we believe this latest contract, will contribute substantially.
With the Markets and Markets research firm projecting rocket and missile market to grow at a CAGR of 4.74% during 2017-2022 to a value worth $70 billion by 2022, scrumptious order flows like the recent one surely indicates at Boeing’ enhanced growth prospects in this market.
Price Movement
Boeing’s stock has rallied about 116.2% in a year, compared with the broader industry’s gain of 57.1%. The outperformance was primarily led by significant demand for its military jets along with robust worldwide demand for its commercial aircraft.
Zacks Rank
Boeing sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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