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Boeing Wins $565M FMS Deal to Remanufacture AH-64E Aircraft

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The Boeing Company (BA - Free Report) recently secured a $564.5-million contract under the Foreign Military Sales program to remanufacture Apache AH-64E aircraft. Boeing will remanufacture the combat helicopter for the militaries of the Netherlands, the UAE and the U.K.

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 Mar 1, 2025.

Growing Importance of Apache AH-64E Helicopters

Boeing’s AH-64 Apache has already emerged as 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. In July, the U.S. Army revealed its plans of granting the company a multiyear contract to remanufacture up to 600 Apache AH-64E helicopters, although no value was disclosed with the news.  

Technological Additions to Boost Demand

In February 2018, the U.S. Army decided to halt the delivery of AH-64E attack helicopters as a strap pack nut on the main rotor was corroding in coastal environments. Hence, the company planned on making new additions to improve performance and safety measures. The new Apache helicopters would have a cognitive decision aiding system, updated Longbow radar and new self-diagnostic abilities. Extended-range fuel tanks may also be included to further increase its range and endurance. Additionally, new and advanced composite rotor blades will improve safety

Therefore, the remanufactured helicopters would be highly advanced and lethal, which in turn is sure to boost their demand.

Boeing’s Growing Prospects in Netherlands, UAE & UK

Boeing’s AH-64 Apache has widely been accepted by several militaries across the world. This is evident as the company secured major orders for this product from the Netherlands, the UAE and the U.K., earlier this year.

In August, Boeing secured a $145.9-million contract for the Netherland’s Longbow Crew Trainers. In September 2018, the nation signed a letter of offer and acceptance worth $1.2 billion for upgrading the Dutch fleet of AH-64D Apache helicopters. In July, the company was awarded a $96.9-million contract to provide support to the Apache helicopters and Longbow crew trainers in the UAE.

Moreover, the U.K. currently operates a modified version of Boeing’s Apache Longbow Crew Trainers. The latest contract will be pivotal for the company in strengthening existing relations and capturing a larger portion of the military helicopter market.

Notably, such order growth is expected to provide Boeing with enormous opportunities to expand in these nations, thereby bolstering its international sales.

Price Performance

Shares of the company have gained 8.1% in the past twelve months compared with the industry’s growth of 27.7%.

Zacks Rank & Key Picks    

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

A few better-ranked stocks in the same space are L3Harris Technology Inc (LHX - Free Report) , Leidos Holdings, Inc. (LDOS - Free Report) and Air Industries Group (AIRI - 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.

L3Harris’ long-term growth estimate currently stands at 8%. The company delivered average positive earnings surprise of 5.02% in the last four quarters.

Air Industries Group delivered average positive earnings surprise of 52.78% in the last four quarters. The Zacks Consensus Estimate for 2019 loss has narrowed 63.6% to 4 cents over the past 60 days.

Leidos Holdings delivered average four-quarter earnings beat of 8.93%. It currently has a solid long-term earnings growth rate of 7.5%.

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