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Boeing Wins $14M Air Force Deal for WGS Communication System

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The Boeing Company (BA - Free Report) recently secured a $14-million modification contract for the Wideband Global Satellite (WGS) communication system, mitigation and anti-jam efforts, and additional strings. The contract was awarded by the Space and Missile Systems Center, Los Angeles Air Force Base, California.

Work related to the deal will be carried out in El Segundo, CA and Colorado Springs, CO, and is expected get completed by Feb 28, 2021. Boeing will utilize fiscal 2018 research, development, test and evaluation funds for the tasks.

A Brief Note on WGS Communication System

The Wideband Global Satellite (WGS) communication system is a high-capacity communication satellite, which features digitally channelized transponder satellites that provide communication capacity, connectivity and flexibility to the U.S. military forces. The system provides two-way X-band and Ka-band communications along with Ka-band broadcast services to the U.S. armed forces and other allied forces worldwide. X-band satellites transfer data, photos and videos to troops on the battlefield. Users of WGS are the United States, Canada and Australia.

What Favors Boeing?

In recent times, it has been observed that the U.S. military has been putting significant emphasis to modernize its space systems. Air Force leaders have also been pressing military contractors to work more efficiently in modernizing satellite systems. To this end, Boeing Defense, Space & Security (BDS) segment has been clinching awards from the United States as well as international customers.

Notably, the company’s BDS segment recorded third-quarter 2018 net sales of $5.73 billion, reflecting a 13% improvement from the year-ago quarter. Considering this, we may expect notable contracts like the latest one to instill further growth in this segment.

Per Markets and Markets research firm, the global satellite transponder market is projected to reach $20.10 billion by 2020 at a CAGR of 5.3% from $15.55 billion in 2015. Such growth prospects for this market should benefit Boeing, being a prominent satellite communication systems provider.

Price Movement

Boeing’s stock has gained 17.6% in the past 12 months compared with the industry’s growth of 2%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.

Zacks Rank & Other Key Picks

Boeing currently carries a Zacks Rank #2 (Buy).

A few other top-ranked companies in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Raytheon Co. (RTN - Free Report) and Lockheed Martin Corp. (LMT - Free Report) .

While Aerojet Rocketdyne sports a Zacks Rank #1 (Strong Buy), Raytheon and Lockheed Martin carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Raytheon delivered average positive earnings surprise of 6.71% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 1.7% to $10.10 cents in the past 90 days.

Lockheed Martin pulled off average positive earnings surprise of 13.92% for the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 2.9% north to $17.51 in the past 90 days.

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