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Boeing Wins $41M Navy Deal for F/A-18E/F Aircraft Support

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The Boeing Company (BA - Free Report) recently won a $41-million contract for providing 2,763 pieces of support equipment, spares and test equipment for the maintenance and repair of F/A-18E/F aircraft. Per the deal terms, Boeing will render these services to the government of Kuwait.

Work related to the deal will be executed in St. Louis, MI, and is scheduled to get completed in June 2022. The contract was awarded by the Naval Air Warfare Center Aircraft Division, Lakehurst, NJ.

A Brief Note on Boeing’s F/A-18E/F Super Hornet

Boeing’s F/A-18E/F Super Hornet is a twin-engine, supersonic, all weather, multirole fighter jet. The U.S. Navy’s tactical and air superiority aircraft is capable of performing virtually every mission in the tactical spectrum, including air superiority, day/night strike with precision-guided weapons, fighter escort, close air support, suppression of enemy air defenses, maritime strike, reconnaissance, forward air control, and tanker missions.

What Favors Boeing?

Boeing, being one of the major players in the defense business, stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog. This allows the company’s defense segment to generate solid top-line performance. Evidently, Boeing Defense, Space & Security (BDS) segment witnessed a 2% year-over-year increase in first-quarter 2019 revenues to $6.61 billion.

Moreover, the U.S. government proposed the fiscal 2020 defense budget in March 2019, under which the Department of Defense would receive $718 billion, reflecting a 4.9% increase from the prior-year budget. Interestingly, the budget includes a spending plan of $57.7 billion on aircraft, reflecting a massive surge of 166% from the approved fiscal 2019 defense spending on aircraft. If approved, this increased spending provision should usher in more contracts for Boeing’s BDS segment, going ahead.

Looking Ahead

Per Frost and Sullivan, the global combat aircraft market is expected to see a CAGR of 0.3%, to $47.2 billion by 2026. Such growth can be attributed to the rise in global threats, geo-political instabilities and increased budget spending on defense. Such projections should continue to boost demand for Boeing’s fighter jets and other combat aircraft programs.

Price Performance

Shares of the company have gained 10.3% in the past six months compared with the industry’s growth of 14.4%.




Zacks Rank & Key Picks    

Boeing currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same sector are Wesco Aircraft Holdings (WAIR - Free Report) , Northrop Grumman Corp. (NOC - Free Report) and Leidos Holdings (LDOS - 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.

Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 3.7% to 84 cents in the past 60 days.

Northrop Grumman came up with average positive earnings surprise of 18.50% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.26% to $19.42 in the past 60 days.

Leidos Holdings came up with average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 1.54% to $4.60 in the past 60 days.

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