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Can Rising KC-46 Demand Strengthen Boeing's Defense Growth?
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Key Takeaways
Boeing's KC-46 contract ceiling rose to $19.1B from $5.7B, adding $13.4B for foreign military sales.
The KC-46 contract runs through April 2035, supporting post-production needs and long-term revenue visibility.
International KC-46 demand could expand production and sustainment opportunities for BA's defense business.
The Boeing Company (BA - Free Report) is strengthening its defense business as the U.S. Air Force and international customers continue to invest in aerial refueling and military transport capabilities. The company recently received a significant increase in the ceiling of its KC-46 Pegasus contract, expanding its opportunity to support the aircraft’s growing international customer base.
The Air Force raised the maximum value of Boeing’s KC-46 contract to $19.1 billion from $5.7 billion, adding $13.4 billion to accommodate additional Foreign Military Sales to Japan, Israel and potential future customers. The contract covers post-production requirements for the KC-46 and is expected to run through April 2035, providing Boeing with significant long-term revenue visibility.
The expanded contract highlights continued demand for the KC-46 as the United States and its allies modernize their aerial refueling fleet. The aircraft provides both air-to-air refueling and military transport capabilities, making it an important platform for supporting global military operations and extending the range of combat aircraft.
International demand could provide an additional growth avenue for Boeing’s defense business as more countries seek modern aerial refueling capabilities and strengthen their military readiness. Expanding Foreign Military Sales also supports greater production and sustainment opportunities over the long term.
With a growing international customer base, a multiyear contract framework and continued demand for aerial refueling capabilities, Boeing is well-positioned to benefit from increased investment in military transport and tanker aircraft.
Defense Stocks to Keep on the Radar
Other defense companies benefiting from rising demand for military aircraft are discussed below:
Lockheed Martin (LMT - Free Report) : LMT continues to expand its international F-35 program, with allies in Europe and the Indo-Pacific increasing purchases and supporting local production and sustainment. Growing global demand should support its aircraft business.
Northrop Grumman (NOC - Free Report) : NOC is expanding its international presence through advanced aircraft and defense programs. Growing demand for the B-21 Raider, E-2D Advanced Hawkeye and other platforms should provide opportunities as U.S. allies strengthen their defense capabilities.
The Zacks Rundown for BA
Shares of Boeing have lost 7% in the past month compared with the Zacks aerospace-defense industry’s decline of 11.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, BA is currently trading at a forward 12-month sales multiple of 1.53X, a discount when stacked up with the industry average of 2.29X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for BA’s 2026 and 2027 earnings has moved south over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Can Rising KC-46 Demand Strengthen Boeing's Defense Growth?
Key Takeaways
The Boeing Company (BA - Free Report) is strengthening its defense business as the U.S. Air Force and international customers continue to invest in aerial refueling and military transport capabilities. The company recently received a significant increase in the ceiling of its KC-46 Pegasus contract, expanding its opportunity to support the aircraft’s growing international customer base.
The Air Force raised the maximum value of Boeing’s KC-46 contract to $19.1 billion from $5.7 billion, adding $13.4 billion to accommodate additional Foreign Military Sales to Japan, Israel and potential future customers. The contract covers post-production requirements for the KC-46 and is expected to run through April 2035, providing Boeing with significant long-term revenue visibility.
The expanded contract highlights continued demand for the KC-46 as the United States and its allies modernize their aerial refueling fleet. The aircraft provides both air-to-air refueling and military transport capabilities, making it an important platform for supporting global military operations and extending the range of combat aircraft.
International demand could provide an additional growth avenue for Boeing’s defense business as more countries seek modern aerial refueling capabilities and strengthen their military readiness. Expanding Foreign Military Sales also supports greater production and sustainment opportunities over the long term.
With a growing international customer base, a multiyear contract framework and continued demand for aerial refueling capabilities, Boeing is well-positioned to benefit from increased investment in military transport and tanker aircraft.
Defense Stocks to Keep on the Radar
Other defense companies benefiting from rising demand for military aircraft are discussed below:
Lockheed Martin (LMT - Free Report) : LMT continues to expand its international F-35 program, with allies in Europe and the Indo-Pacific increasing purchases and supporting local production and sustainment. Growing global demand should support its aircraft business.
Northrop Grumman (NOC - Free Report) : NOC is expanding its international presence through advanced aircraft and defense programs. Growing demand for the B-21 Raider, E-2D Advanced Hawkeye and other platforms should provide opportunities as U.S. allies strengthen their defense capabilities.
The Zacks Rundown for BA
Shares of Boeing have lost 7% in the past month compared with the Zacks aerospace-defense industry’s decline of 11.7%.
Image Source: Zacks Investment Research
From a valuation standpoint, BA is currently trading at a forward 12-month sales multiple of 1.53X, a discount when stacked up with the industry average of 2.29X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for BA’s 2026 and 2027 earnings has moved south over the past 60 days.
Image Source: Zacks Investment Research
BA stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.