Boeing Gets Air Force Contract - Analyst Blog

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The Boeing Company ( BA ) was awarded a $10 million cost plus fixed fee contract to provide systems studies, analyses integrations and demonstrations with the unmanned aerial system termed dominator and common smart sub-munition to assess the capabilities of the system in meeting Air Force Research Laboratory requirements.  The location of the performance is St. Louis, Montana.  Work is expected to be completed by January 25, 2017.  The contracting activity is AFRL/RWK, Eglin Air Force Base, Florida.

Boeing enjoys a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries, and is also one of the largest aerospace and defense contractors. Besides, its revenues are spread across more than 90 countries around the globe.

Looking forward, Boeing in its 2012 Current Market Outlook estimates a $4.5 trillion market for 34,000 new commercial airplanes over the next 20 years. Boeing's projection of growth is based on the strength of the commercial aviation market, recovery witnessed in world economies and strong demand for fleet addition and replacement. Airline traffic is forecast to grow at a 5% annual rate over the next two decades, with cargo traffic projected to grow at an annual rate of 5.2%.

Inspired by such strong projections, Boeing recently raised its full-year 2012 earnings per share guidance to a range of $4.40-$4.60 versus its earlier guidance range of $4.15-$4.35. The company's revenue guidance for 2012 is in the range of $79.5-$81.5 billion versus the earlier range of $78.0-$80.0 billion. Commercial Airplanes' 2012 deliveries are expected to be between 585 and 600 airplanes, which are already sold out. This includes an expected 70 to 85 787 and 747-8 deliveries. Commercial Airplanes' 2012 revenue is expected to be between $47.5 billion and $49.5 billion with operating margin hovering around 9.0%.

In the defense space, however, the threat of cutbacks will loom over the company going forward. Overall, Boeing expects defense revenue for 2012 to be between $31.5 billion and $32.0 billion with operating margin greater than 9%.  

The company is expected to release its third-quarter 2012 results on October 24, 2012. The Zacks Consensus Estimates for third-quarter 2012 and fiscal 2012 are currently pegged at $1.12 per share and $4.71 per share, respectively.

Boeing currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock. This is in sync with other aerospace and defense behemoths, General Dynamics Corporation ( GD ) and Lockheed Martin Corporation ( LMT ).


 
BOEING CO (BA): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BA , GD , LMT

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