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Boeing (BA) Clinches Contract to Support Missile Program

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The Boeing Company (BA - Free Report) clinched a modification contract to support missile systems. The award has been offered by the Air Force Research Laboratory, Eglin Air Force Base, FL.

Details of the Deal

Valued at $35 million, the contract is expected to be completed by Sep 28, 2027. Per the terms of the deal, Boeing will perform continued research and development to investigate advanced missile sub-system components for supporting the Compact Air-to-Air Missile and Extended Range Air-to-Air Missile Systems.

Work related to this deal will be carried out in St. Louis, MO.

Benefits of the Deal

Increasing geopolitical tensions worldwide have prompted nations to further strengthen their defense systems. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. With the United States being the world’s largest weapon supplier and Boeing being a prominent missile maker in the country, the increased missile defense adoption by the nations provides BA with solid growth opportunities.

Notably, Boeing’s Defense, Space & Security segment engages in the research, development, production and modification of products and related services, including strategic missile and defense systems.

Its Harpoon missile, the world’s most successful anti-ship missile, is in service with the armed forces of more than 30 countries. Harpoon missiles have been upgraded over the years and are now available as the Harpoon Block II. Some other missiles in Boeing’s product portfolio are the supersonic Bomarc missile, Thor missile, AGM-86B/C Air Launched Cruise Missile and GAM-77 Hound Dog Missile.

With such advanced weaponry in its portfolio, BA enjoys solid demand in the defense space. The latest contract is a bright example of that. These developments should boost the company’s top-line growth.

Growth Prospects

Nations have increased their spending on military equipment and various arsenals to strengthen their defense capabilities. The surge in demand for defense products is primarily due to rising geopolitical tensions and amplified terrorist threats. Hence, military missiles, an integral part of any defense system, have registered a steady growth in demand.

Per a report from Mordor Intelligence, the missiles and missile defense system market is projected to witness a CAGR of 4.9% during 2022-2027. Such abounding growth trends indicate ample development opportunities for Boeing as it enjoys a lucrative position in the aforementioned market.

A few defense primes that can reap the benefits of the missiles and missile defense system market are Northrop Grumman (NOC - Free Report) , Raytheon Technologies (RTX - Free Report) and Lockheed Martin (LMT - Free Report) .

Northrop Grumman designs and produces missile products, including advanced high-speed propulsion systems, fuses, warheads and controls for air, sea and land-based systems.

The company boasts a long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for NOC’s 2023 sales indicates an improvement of 4.7% from the 2022 reported figure.

Raytheon’s Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. The unit serves as a prime contractor or major subcontractor on numerous missile and related programs with the U.S. Department of Defense.

Raytheon’s long-term earnings growth rate is 8.3%. The Zacks Consensus Estimate for RTX’s 2023 sales indicates an 8.3% increase from the prior-year reported figure.

Lockheed’s Missiles and Fire Control (MFC) is a recognized designer, developer and manufacturer of precision engagement aerospace and defense systems for the United States and allied militaries. MFC develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies.

LMT’s long-term earnings growth rate is 6.2%. Shares of the company have risen 9.4% in the past year.

Price Performance

Shares of Boeing have rallied 62.2% in the past year against the industry’s 2.1% decline.

Zacks Investment Research
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Zacks Rank

Boeing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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