The Boeing Company (BA - Free Report) recently won a contract for supplying the design, development, fabrication, test, verification, certification, delivery, and support of four MQ-25A unmanned air vehicles (UAV). Majority of the work related to the deal will be carried out in Louis, MO.
Details of the Deal
Valued at $805.3 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, Maryland. Per the terms of the agreement, Boeing will also integrate the UAVs into the carrier air wing to offer an initial operational capability to the Navy.
Fiscal 2018 research, development, test and evaluation (Navy) funds will be used by the company to complete the task by August 2024.
Boeing’s MQ-25A is a carrier-based unmanned aircraft system, designed to provide aerial refueling capability. It thereby extends the combat range of deployed Boeing F/A-18 Super Hornet, Boeing EA-18G Growler, and Lockheed Martin (LMT - Free Report) F-35C fighters.
With increasing complexities of terrorism across the globe, the demand for UAVs has risen. This is because when sustained endurance efforts are required, unmanned aircraft provide superior capabilities. Also, physical infrastructure limitations sometimes prohibit the use of manned rotary or fixed-winged aircraft.
In the United States, the primary purpose of domestic UAV operations is to provide realistic training experience, test equipment and tactics to the Department of Defense (DoD) forces in order to prepare them for potential overseas warfighting missions. Moreover, these unmanned air vehicleshelp the Defense Support of Civilian Authorities (DSCA) during training and exercises.
In this context it is imperative to mention that aerospace major Boeing bears more than 10 years of experience in unmanned aircraft systems (UAS) flight services and information delivery. Notably the company’s Insitu offers high-performance, low-cost UAS used for intelligence, surveillance and reconnaissance (ISR). This subsidiary also thrives to bring in new, advanced UAVs, and the latest contract is an evidence to that.
Over the past 90 years, Boeing has been delivering carrier aircraft to the U.S. Navy. Considering the valued expertise the company has in UAS, the latest budgetary expansions in the United States, and the fact that MQ-25A is going to hit the U.S. market post delivery of the latest contract, we may expect the aircraft giant to win more such contracts involving its MQ-25A UAV, in days ahead.
In a year’s time, Boeing’s shares have gained 44.7% compared with the industry’s growth of 20.9%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.
Zacks Rank & Key Picks
Boeing currently carries a Zacks Rank #3 (Hold).A few better-ranked stocks in the same space are Engility Holdings (EGL - Free Report) and Huntington Ingalls Industries (HII - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Engility Holdings delivered an average positive earnings surprise of 19% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings moved north 16.8% to $2.02 over the last 90 days.
Huntington Ingalls Industries came up with an average positive earnings surprise of 9.48% in the preceeding four quarters. The Zacks Consensus Estimate for 2018 earnings moved up 3.7% to $17.24 over the last 90 days.
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