The Boeing Company’s BA shares edged up 1.45% after yesterday’s trading session to close at $140.73, on the back of three orders from the U.S. Department of Defense (DoD).
The largest order worth $358.9 million was essentially a modification of a previous contract for the procurement of long-lead items for the manufacture and delivery of aircraft. These include 9 U.S. Navy full rate production (“FRP”) Lot II P-8A aircraft, 16 U.S. Navy FRP Lot III P-8A aircraft, and 4 Royal Australian Air Force FRP Lot III P-8A aircraft.
Under a cooperative agreement, this order is a combination of purchase from the U.S. Navy (61%) and the government of Australia (39%). The order is expected to be completed by Dec 2018.
The second contract in terms of value came in at $85.3 million from the Missile Defense Agency which was also a modification contract for the $3.8 billion original contract. The order was placed for increasing the direct productive labor hour pool by 600,000 hours to award future task instructions. The expected delivery is slated for Dec 2018.
Worth nearly $10.1 million, the final contract from yesterday’s funding list was placed by the U.S. Navy for hardware integration for Phase II to integrate the Next Generation Jammer Pod onto the EA-18G aircraft. The Phase II hardware integration will ensure that the development, preparation and delivery of the aircraft modification design is appropriate for the technology development stage of the Next Generation Jammer Pod program. The contract is expected to be concluded by Feb 2016.
Boeing is one of the major players in the aerospace and defense industry. The company’s defense business stands out among its peers by virtue of its broadly diversified programs, strong order bookings and order backlog.
At the end of the first quarter of 2015, Boeing Defense, Space & Security (BDS) had a backlog of $60 billion, 37% of which comprised orders from international clients. This shows that Boeing is witnessing strong demand for its defense products internationally as well.
Currently, Boeing is well placed with a Zacks Rank #2 (Buy). Lockheed Martin Corp. LMT, Northrop Grumman Corp. NOC and Leidos Holdings, Inc. LDOS are also worth considering as all the three stocks presently carry the same Zacks Rank as Boeing.
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