The Boeing Company BA recently secured a contract to supply spare parts for CH-47 Block 2 helicopter. The award has been provided by the U.S. Army Contracting Command, Redstone Arsenal, AL.
Valued at $12.4 million, the contract is expected to be completed by Feb 28, 2028. Work location for this deal will be determined with each order.
Importance of CH-47 Chinook
Boeing’s CH-47 Chinook Block II helicopter boasts cutting-edge technologies that are most suitable for heavy-lift mission requirements. Additionally, Block II improves readiness for the U.S. Army and Special Operations warfighters, limits future sustainment costs and provides commonality across the fleet to ensure that the Chinook fleet will be available to serve for decades.
Due to its unrivaled production, maintenance and sustainment cost efficiencies, the helicopter enjoys steady demand. More than 950 Chinooks are being deployed in 20 countries, thus highlighting the solid demand for this helicopter. Boeing may continue to witness a steady flow of contracts involving CH-47 Chinook, just like the latest one.
Growth Prospects
The tiff between Russia and Ukraine has compelled nations to increase their defense spending to fortify their defense structure against any sudden assault. Increased spending has been witnessed for defense arms and ammunition procurement. In this context, military helicopters that play an integral part in any defense landscape are likely to witness a surge in demand.
Per a report from the Fortune Business Insights firm, the global helicopter market is likely to witness a CAGR of 3.7% over the 2023-2030 period. Boeing is poised to enjoy the perks of the expanding helicopter market due to its established position in manufacturing combat helicopters like AH-64 Apache, CH-47 Chinook and AH-6 little bird.
Other defense primes that may reap the benefits of a likely improvement in helicopter market are as follows.
Airbus’ EADSY — one of the world's largest suppliers of advanced military helicopters — Airbus Helicopters principal military clients are the Ministries of Defence in Europe, Asia, the United States and Latin America. Some of EADSY’s military helicopters include H125M, H135, H145M, AS565MBe, H160M, H175M, H215M, H225M, etc.
Airbus boasts a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for EADSY’s 2023 sales indicates an improvement of 17.8% from the 2022 reported figure.
Lockheed Martin’s LMT Sikorsky business unit provides military and rotary-wing aircraft to all five branches of the U.S. armed forces, along with military services and commercial operators in 40 nations. Some of LMT’s products are Armed Black Hawk, CH-53K, MH-60R, Defiant X, Raider X, S-97 Raider, FireHawk, etc.
Lockheed boasts a long-term earnings growth rate of 6.5%. The consensus estimate for LMT’s 2023 sales indicates an improvement of 1% from the 2022 reported figure.
Textron’s TXT Bell business supplies advanced military helicopters and provides parts and support services to the U.S. government and military customers outside the United States. TXT Bell’s primary U.S. government programs are for the production and support of the V-22 tiltrotor aircraft and H-1 helicopters.
Textron boasts a long-term earnings growth rate of 11.7%. The consensus mark for TXT’s 2023 sales indicates an improvement of 7.7% from the previous year’s reported number.
Price Movement
Shares of Boeing have rallied 43.7% in the past year against the industry’s 7.2% decline.
Image Source: Zacks Investment Research
Zacks Rank
Boeing currently has 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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