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Boeing (BA) Wins $409M Air Force Deal for NGT-PAC Program

Zacks

The Boeing Co. BA has clinched a contract for Next Generation Thermal, Power and Controls (NGT-PAC) program. Work related to this deal is scheduled to be over by Jul 2024.

Details of the Deal

Valued at $409 million, the contract has been awarded by the Air Force Research Laboratory, Wright-Patterson Air Force Base, OH.

In fact, this deal is a joint effort of multiple government agencies and industry to develop revolutionary and innovative technologies. Through this contract, applied research will also be conducted for enhancing knowledge and understanding of future power, thermal and controls requirements.

Work will be carried out at Hazelwood, MI, using fiscal 2017 research and development funds.

Why Boeing?

Boeing is one of the major players in the defense business. In fact, the company stands out among its peers by virtue of its broadly diversified programs, strong order bookings and solid backlog.

In particular, among other defense equipment, Boeing’s forte has been combat-proven aircraft. Also, it started developing military aerial refueling and strategic transport aircraft of late. Notably, with its proven expertise in aerospace programs, the company has been clinching a huge number of contracts from the Pentagon for long.

In June, Boeing secured a modification to a foreign military sales contract worth $410.9 million from the U.S. Army Contracting Command, Redstone Arsenal, AL. Per the terms of the original contract, it will provide 38 Apache aircraft, three Longbow crew trainers and associated spares to the U.K. government.

Again, the company’s unit secured a contract, valued at $475 million, to provide intelligence, surveillance and reconnaissance services in support of the Mid-Endurance Unmanned Aircraft Systems program, at multiple locations across the globe. Going forward, we expect these contracts to add further impetus to the company’s growth trajectory.

Considering the favorable budgetary scenario now, we expect such generous fund flows from Pentagon, in the form of contracts, to help Boeing achieve its desired business expansion in the near term.

Interestingly, Trump’s presidency seems to have created a win-win situation for the Aerospace and Defense big shots like Lockheed Martin Corp. LMT, Northrop Grumman Corporation NOC and Huntington Ingalls Industries, Inc. HII. Evidently, these stocks saw a notable rise after Trump presented his “America First” budget.

Additionally, an increase in fund flow from the Pentagon raised optimism. Hence, we expect these factors to enable Boeing in winning more such scrumptious orders in the days ahead.

Price Movement

Shares of Boeing have rallied 79.8% in the last 12 months, outperforming the industry’s gain of 34.6%. This could be because the company’s strong balance sheet and cash flows that provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.



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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