The Boeing Company BA recently secured a contract, with a ceiling amount of $999 million for A-10 wing replacements. Per the terms, the company will deliver 112 new A-10 wing assemblies and up to 15 wing kits for the A-10 Thunderbolt II attack aircraft. The contract was awarded by the Air Force Life Cycle Management Center, Hill Air Force Base, UT.
Work related to the deal is expected to get completed by Aug 23, 2030, and will be performed across multiple subcontractor locations in the United States along with one subcontractor location in South Korea.
A Brief Note on the A-10 Thunderbolt II
The A-10 Thunderbolt II, manufactured by Northrop Grumman NOC, is the U.S. Air Force’s primary low-altitude close air support aircraft. These aircraft have Night Vision Imaging Systems and a large bubble canopy, which provide pilots all-around vision. The Thunderbolt II can employ a wide range of conventional munitions to defeat various targets, including tanks.
What Favors Boeing’s Defense Business?
Increasing geopolitical tensions across the globe, especially in the Middle East, are prompting nations to strengthen their defense systems manifold. Evidently, the demand for fighter jets, aircraft component and other critical defense products keeps escalating. Boeing, being a defense giant itself, will benefit a great deal from such demand rise. This will likely enable the company to gain opportunities in acquiring contracts related to fighter aircraft and major aircraft components.
Interestingly, the $750-billion fiscal 2020 defense budget includes a spending plan of $57.7 billion on aircraft, a massive increase of 166% from the approved fiscal 2019 defense spending. If approved, this increased spending provision should usher in more contracts for Boeing’s various aircraft program. Hence, this will increase the global demand for a variety of aircraft components and sub-components manufactured by the company.
Shares of the company have gained 5.4% year to date compared with the industry’s growth of 21.7%.
Zacks Rank & Key Picks
Boeing currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same space are Wesco Aircraft Holdings WAIR and Lockheed Martin Corp. LMT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 1.2% to 85 cents in the past 60 days.
Lockheed Martin’s long-term growth estimates currently stand at 7.1%. The Zacks Consensus Estimate for 2019 earnings has risen 3.41% to $21.20 in the past 60 days.
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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Wesco Aircraft Holdings, Inc. (WAIR) : Free Stock Analysis Report
The Boeing Company (BA) : Free Stock Analysis Report
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