Boeing (BA) Wins Contract to Support Harpoon Missile System
The Boeing Company BA recently clinched a contract involving its Harpoon missiles. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $14.7 million, the contract is expected to be completed by June 2028. Per the terms of the deal, Boeing will procure one Harpoon Weapon System (HWS) joint common test set (JCTS); one two-year HWS JCTS interim spares kit; and technical manuals.
Under this agreement, the jet giant will also offer JCTS weapons station installation and checkout, installation and checkout equipment loan, temporary shipment/loan of tools, weapon station training, JCTS checkout and calibration support, and engineering technical services.
The contract will serve the government of Egypt. Majority of the work related to this deal will be carried out in St. Charles, 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 U.S. missile maker, the increased missile defense adoption by the nations provides the company 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 is the world’s most successful anti-ship missile and 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 include the supersonic Bomarc missile, the Thor missile, the AGM-86B/C Air Launched Cruise Missile and the GAM-77 Hound Dog Missile.
With such advanced weaponry in its portfolio, Boeing enjoys solid demand in the missile defense space. The latest contract win is a bright example of that, which, in turn, should boost BA’s top-line growth.
Growth Prospects
Nations have increased their defense 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 4.8% during 2023-2028. Such abounding growth trends indicate ample development opportunities for Boeing as it enjoys a lucrative position in the missile market.
A few defense primes that can reap the benefits of the aforementioned market are Northrop Grumman NOC, RTX Corporation RTX and Lockheed Martin LMT.
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 4.10%. The Zacks Consensus Estimate for NOC’s 2023 sales indicates an improvement of 5.6% from the 2022 reported figure.
RTX is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. Its product portfolio includes Advanced Medium Range Air-to-Air Missile (AMRAAM), Guidance Enhanced Missile (GEM-T), the National Advanced Surface-to-Air Missile System (NASAMS), Tomahawk, Standard Missile 2 (SM-2) and a few more.
RTX’s long-term earnings growth rate is 7.9%. The Zacks Consensus Estimate for its 2023 sales indicates a 9.9% increase from the prior-year reported figure.
Lockheed Martin’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. These include the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies.
LMT boasts a four-quarter average earnings surprise of 5.04%. The stock has a long-term earnings growth rate of 6.5%.
Price Performance
Shares of Boeing have rallied 43.7% in the past year against the industry’s 6.2% decline.
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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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