The Boeing Company (BA - Free Report) recently secured a $49.2-million contract under the Foreign Military Sales program to provide maintenance augmentation team services for the Qatari Air Force’s AH-64E Apache aircraft. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.
Work related to the deal will be performed in Mesa, AZ, and is expected to get completed by Jul 31, 2024.
A Brief Note on Boeing’s Apache AH-64E
Boeing’s AH-64 Apache is the world’s most advanced multi-role combat helicopter that is used by the U.S. Army and a growing number of international defense forces. Notably, AH-64E is the latest version of the AH-64 gunship and is equipped with new sensors, avionics and improved night operation capabilities. Also, it has infra-red suppressing exhaust system along with chaff and flare dispensers, which jointly reduce the chances of being hit by enemy air defense missiles.
Boeing’s Prospects in Qatar
Due to the ongoing diplomatic issues and conflicts between Qatar and Saudi Arabia along with other geo-political tensions across the Middle East, defense giants like Boeing tend to benefit the most. As a result of such rising instabilities, the Qatar government has been buying military aircraft from Boeing to strengthen the country’s defense arsenal and adopt appropriate counter measures at the time of crisis. In line with this, the Qatar Emiri Air Force (QEAF), in August 2018, ordered 36 F-15QA Eagle multi-role fighters from Boeing, worth $6.2 billion. The latest contract seems to have followed suit. Notably, such massive order growth is expected to provide the company with enormous opportunities to expand growth in Qatar, thereby bolstering its international sales.
What Favors Boeing?
Boeing's Defense, Space & Security (BDS) segment specializes in providing technical expertise and integrated fleet support to vertical lift maintenance, modifications and repairs. The segment also provides a broad spectrum of innovative products and services, which directly support and enhance capabilities of military rotorcrafts. Notably, its proven expertise in the field of technical services has enabled the company in clinching the deal.
Meanwhile, this year, the U.S. Senate approved the fiscal 2019 defense budget that provisioned major war fighting investments of $21.7 billion for aircraft. The budget also included a $1.3-billion investment for the production of 60 AH-64E helicopters. Such budgetary developments reflect solid growth prospects for the company’s BDS segment.
Shares of Boeing have gained about 7% in a year, against the industry’s decline of 9.5%. The outperformance was primarily led by significant demand for the company’s military jets across the globe and robust long-term demand for its commercial aircraft.
Zacks Rank & Other Stocks to Consider
Boeing currently carries a Zacks Rank #2 (Buy).
A few top-ranked companies in the same sector are Aerojet Rocketdyne Holdings (AJRD - Free Report) , Teledyne Technologies Incorporated (TDY - Free Report) and Lockheed Martin Corporation (LMT - Free Report) .
While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Lockheed Martin carries 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.
Teledyne Technologies came up with average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 6% to $8.75 in the past 90 days.
Lockheed Martin delivered average positive earnings surprise of 13.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 2.9% to $17.51 in the past 90 days.
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