The Boeing Company (BA) has received a $59 million modification contract from the U.S. Department of Defense (“DoD”). Per the contract, Boeing will continue to provide sustainment, programmed depot maintenance, modification and other related support services for the E-4B platform.
The contract work, which is expected to be over by May, 2015, will be done in Oklahoma. The contracting activity is the Air Force Life Cycle Management Center, Tinker Air Force Base, OK.
Boeing’s E-4 operates as a mobile command post for the National Command Authority. It has the capacity to remain air-borne for a significant duration of time. Its high endurance capacity has won it contracts from the US Air Force.
Of late, this Zacks Rank #3 (Hold) company has won a number of contracts from the DoD, which includes both big tickets and small ones. On Nov 24, 2014, it won a modification contract worth $82.6 million for the Joint Direct Attack Munition tail kits. Recently it has also won a $194.8 million modification contract to procure 21 units of Lot 38 full-rate production EA-18G airborne electronic attack kits. (Read more: Boeing Wins Modification Contract from DoD worth $194.8M)
The company recently provided its 2014 defense revenue target in the range of $30 billion to $31 billion and an operating margin of approximately 9.5%.
In order to maintain its defense operating margins, the company has announced further plans to consolidate its defense business. Boeing will relocate a majority of its defense services and support work out of Washington to Oklahoma and St. Louis. The transition process will take around three years.
Moreover, the exit of Defense Secretary Chuck Hagel amid rising tensions in the Middle East along with the Republican win may benefit the defense sector. The Republicans’ favor for higher defense spending may brighten the prospects for defense behemoths like Boeing, General Dynamics Corp. (GD), Lockheed Martin Corp. (LMT) and Northrop Grumman Corporation (NOC). (Read more: Defense Stocks in focus following Hagel’s Exit amid Crisis)
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