Boeing Soars on $20B Navy Contract Win: Will Defense Business Fuel Growth?
Boeing's (BA) win of the $20B-plus Navy fighter contract has investors taking notice. JPMorgan maintained its 'Overweight' rating and $290 price target on BA stock, calling the award 'truly important.' The firm noted that Boeing's selection over Northrop Grumman was not a surprise, as it has a lock on sixth-generation fighters.
However, JPMorgan emphasized that the more significant financial development for investors will be Boeing's progress in increasing commercial aircraft production and improving cash flow per plane. This aligns with William Blair's 'Outperform' rating on BA stock, which also sees improvement in the company's defense business.
The F/A-XX contract is valued at over $20 billion for the full-scale development phase and includes multiple test aircraft. The U.S. Navy selected Boeing to design, build, and deliver its sixth-generation fighter, expected to replace the service's F/A-18E/F Super Hornets and EA-18G Growlers beginning in the 2030s.
Boeing also secured an agreement with Ethiopian Airlines for 10 freighters, including eight 777-8Fs and two 777Fs, with an option for eight additional 777-8Fs. The airline's CEO, Mesfin Tasew, stated that the aircraft have a catalog value of $5 billion.