The Boeing Company (BA - Free Report) recently secured two contracts worth a combined $2.6 billion for manufacturing air-to-surface and anti-ship missiles for Saudi Arabia and other nations across the globe. Both contracts have been awarded by the Naval Air Systems Command, Patuxent River, MD.
Details of the Contracts
The first contract worth $1.97 billion involves the production and delivery of 650 Standoff Land Attack Missile Expanded Response (SLAM ER) missiles to Saudi Arabia, whereas the second contract worth $657 million is related to the delivery of 467 Harpoon Block II missiles. The second deal also entails the delivery of support equipment to Saudi Arabia, Japan, Brazil, Thailand, the Netherlands, India and South Korea.
The first contract secured by the company will mostly get executed in St. Louis, MI, and Indianapolis, IN, with the completion expected in December 2028.
Meanwhile, for the second contract, majority of the work will be performed in St. Louis, MI, and McKinney, TX. Per the deal terms, Boeing will provide 402 Block II missiles and support equipment to Saudi Arabia, 53 missiles to Qatar alongside delivering missiles and support equipment to other nations, mentioned earlier.
A Brief Note on SLAM ER and Harpoon Missiles
Boeing’s SLAM ER missile is an advanced, stand-off, precision-guided, air-launched cruise missile that is capable of attacking land and sea targets from medium to long ranges. Whereas, the Harpoon Block II is an over-the-horizon, anti-ship missile, which is also the world’s superior anti-ship missile capable of performing land-strike and anti-ship missions.
With more nations across the globe emphasizing on increasing defense spending, Boeing has successfully been able to acquire frequent order flows from international markets for advanced missiles like SLAM ER and Harpoon Block II missiles.
Notably, the fiscal 2021 defense budget proposal reflects a solid spending provision of $20.3 billion for missile defense and defeat programs. Such improved budgetary provision, if approved, should usher in more contracts for Boeing, as this jet maker is also a renowned munitions manufacturer in the United States. Other prominent missile makers such as Lockheed Martin Corp. (LMT - Free Report) , Northrop Grumman Corp. (NOC - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) are also likely to significantly gain from the budget revision.
Price Movement and Zacks Rank
Shares of Boeing, currently carrying a Zacks Rank #3 (Hold), have slumped 66% in the past 12 months compared with the industry’s decline of 33.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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