The Boeing Company (BA - Free Report) recently secured a $439.2-million contract for developing new Apache AH-64E aircraft and Longbow crew trainers. Work related to the deal is scheduled to be completed by Mar 1, 2025.
Per the deal terms, Boeing will develop the combat helicopter for the Moroccan Army. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL, and the tasks will be executed in Mesa, AZ.
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. Its AH-64E is the latest version of the AH-64 gunship, which is equipped with new sensors, avionics and improved night operation capabilities.
In addition, it has an infrared suppressing exhaust system as well as chaff and flare dispensers, which jointly reduce the chances of being hit by enemy air defense missiles. Notably, militaries of nations, such as India, the United Kingdom, Netherlands, Morocco, Israel and Egypt, among many others, alongside the United States have deployed the Apache Helicopters in their arsenal.
What Favors Boeing?
Boeing has already delivered more than 2,400 Apaches to various customers globally. In recent times, increasing geopolitical tensions across the world have prompted developing nations to effectively increase their defense budget. In line with this, the fiscal 2021 U.S. defense budget proposal includes a spending provision of $1.2 billion, specifically for developing 52 AH-64E Attack Helicopters. If approved, such fresh orders will boost prospects for the company.
Further, per a report by the Research and Markets firm, the global military rotorcraft market is expected to witness a CAGR of 4.28% to $30.7 billion by 2028. Such growth can be attributed to the need for replacing aging fleets and enhancement of capabilities pertaining to disaster relief operations. Additionally, many nations are now focusing on either developing or procuring helicopters with multiple mission modes, which is driving the demand for military helicopters across the world. As a result, such projections could significantly benefit helicopter-makers like Boeing, Lockheed Martin (LMT - Free Report) and Textron (TXT - Free Report) in the days ahead.
Boeing’s stock has improved 8% in the past three months compared with the industry’s growth of 3.3%.
Zacks Rank & A Key Pick
Boeing currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Embraer S.A. (ERJ - Free Report) , which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Embraer delivered a positive earnings surprise of 14.93% in the trailing quarter. The company has a long-term (three to five years) earnings growth rate of 17%.
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