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Boeing (BA) Wins $8M Deal for Blackjack UAS from U.S. Navy

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Aircraft major, The Boeing Company 's BA subsidiary, Insitu Inc. recently secured a modification contract to exercise an option for the procurement of full-rate production of one Lot I RQ-21A Blackjack Unmanned Aircraft Systems (UAS). The procurement will be done for the Marine Corps.

Details of the Deal

Valued at $8 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Per the terms, the UAS will consist of air vehicles, ground control stations, launch and recovery equipment, air vehicle support equipment kit, and systems engineering and program management.

Majority of the work related to the deal will be carried out in Bingen, WA while the rest will be done in Hood River, OR. Fiscal 2017 aircraft procurement (Marine Corps) funds will be utilized to finance the work, which is expected to be over by Jan 2018.

A Brief Note on Blackjack UAS

The RQ-21A Blackjack system is a modular, versatile and multi-mission capable UAS that provides rapid transitions between land and maritime environments. The aircraft can safeguard military bases and activities through a pattern of life identification and explosive device detection.

Its electro-optic/infrared (EO/IR) payloads support real-time monitoring to provide indications and threat warnings while its plug-and-play payloads enable multi-intelligence capability to support a broad range of operations.

Our View

With terrorist threats increasing each day across the globe, the demand for UAS is rising. This is because when sustained endurance efforts are required, unmanned aircraft provide superior capabilities. Also physical infrastructure limitations sometimes prohibit the use of manned rotary or fixed-winged aircraft.

Boeing's Insitu provides high-performance, low-cost UAS used for ISR. One of its well-known products is the long-endurance autonomous unmanned vehicle - ScanEagle. It is based on Insitu's Seascan miniature robotic aircraft.

In the U.S.,the primary purpose of domestic UAS operations is to provide realistic training experience, test equipment and tactics to the Department of Defense (DoD) forces in preparation for potential overseas warfighting missions along with helping in Defense Support of Civilian Authorities (DSCA) training and exercises.

While defense biggies like Boeing are already gaining accelerated traction under the rule of President Trump, the proposed base budget appropriations of Mar 2017 that sought to invest $13.5 billion in various military artilleries - including UAS - surely added further impetus to the company's growth trajectory. We believe that the aforementioned contract reflects increased attention of the U.S. government toward strengthening its UAS, as well as a positive indication that the budget appropriation may get approved in the days ahead.

Price Performance

Shares of Boeing have rallied 46.4% over the last 12 months, outperforming the Zacks categorized Aerospace-Defense industry's gain of 25.3%. This could be because the company's strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions. In addition, the company poses strong competition to its peers like Lockheed Martin Corp. LMT , General Dynamics Corp. GD and Huntington Ingalls Industries, Inc. HII .

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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Boeing Company (The) (BA): Free Stock Analysis Report

General Dynamics Corporation (GD): Free Stock Analysis Report

Lockheed Martin Corporation (LMT): Free Stock Analysis Report

Huntington Ingalls Industries, Inc. (HII): 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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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