The Department of Defense handed out a slew of contracts worth $225.4 million yesterday. Among the winners was The Boeing Company (BA – Analyst Report) which secured two orders valued at a total of $37.0 million.
The bigger of the two awards was a $26.9 million modification contract to a previously awarded contract to exercise an option for partial redesigning of Lot 1 of its P-8A Poseidon sub-hunting aircraft. The contracting activity is the Naval Air Systems Command, Patuxent River in Maryland.
The contract is expected to run through Apr 2017 and the work will be carried out in Seattle, Wash. The second contract, valued at $10.1 million, calls for the repairing of 559 unspecified items required to support the P8 aircraft. The tasks related to the contract will be performed at Dallas, Texas, and is expected to be concluded by Sep 30, 2015.
The P8 aircraft conducts anti-submarine warfare and shipping interdiction as well as engages in an electronic intelligence role. It also works in conjunction with the Broad Area Maritime Surveillance unmanned aerial vehicle.
Boeing unveiled its latest P-8A Poseidon model at the 2013 Dubai Air Show to much fanfare. The latest incarnation of the P-8 offers more combat capability for the Navy using a smaller force and fewer infrastructure.
The escalating security issues in the Middle East have the prime countries rushing in to purchase high-tech defense products from Boeing. In addition, increased penetration in the growing airline markets of Latin America, Africa and Asia and a rise in inter-regional travel have led to skyrocketing demand in the Gulf countries.
The Dubai Expo fetched contracts worth $100 billion for the company. Major airlines like Emirates Airline, Qatar Airways and Etihad Airways were the key buyers of Boeing’s flagship 777X jets and 787 Dreamliners.
At home, despite the budget sequestration, Boeing has sizeable orders on its plate. The company received contracts worth more than $2 billion in Sep 2013 alone. Boeing’s new P8 version will lend substantial upside as the U.S. Navy has recently announced its plans to purchase 117 P-8A aircraft.
Presently, Boeing carries a Zacks Rank #2 (Buy). Other well-placed operators include Zacks Ranked #2 Lockheed Martin Corp. (LMT – Analyst Report),Huntington Ingalls Industries, Inc. (HII –Snapshot Report) and Northrop Grumman Corp. (NOC – Analyst Report).
