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Boeing Secures a Contract to Build a Next-Generation Fighter Aircraft

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The Boeing Company (BA - Free Report) recently clinched a contract to design, build and deliver its next-generation fighter aircraft under the Next Generation Air Dominance (NGAD) program. The award has been provided by the United States Air Force. Following the news on Friday, shares of the company surged 3.06%.

This new contract win will assist Boeing to further strengthen its position in the U.S. Defense market and will adversely impact the prospects of its peer Lockheed Martin (LMT - Free Report) . Lockheed shares lost nearly 5.8% on Friday after the deal was announced.

Details of BA’s Deal

The new fighter jet will replace Lockheed Martin's F-22 Raptor and is designed to fight alongside drones, enhancing air combat capabilities. The name of the new aircraft will be F-47. The initial deal value is $20 billion and the company expects more orders worth hundreds of billion from the U.S. Government and its foreign allies.

What’s Favoring BA Stock?

Rising military conflicts, terrorism and border disputes, along with rapid technological advancements in combat jets, have led nations to increase their defense spending on combat-proven jets, which constitute an integral part of their defense structure.

This is likely to have prompted Mordor Intelligence to forecast a compound annual growth rate of 4.7% for the global military aviation market during the 2025-2030 period.

Such solid market prospects offer growth opportunities for Boeing. Its portfolio includes well-established combat jets like the F/A- Super Hornet, F-15, EA-18G Growler and T-7A Red Hawk.

The Boeing Defense, Space & Security segment secured key contract awards worth $8 billion in the fourth quarter. This resulted in a solid backlog amount of $64.02 billion for this segment as of Dec. 31, 2024.

Opportunities for BA’s Peers

Other aerospace companies that are likely to benefit from the expanding global military aviation market are discussed below:

Northrop Grumman Corporation (NOC - Free Report) : Northrop is a provider of manned and unmanned air systems. It builds some of the world’s most advanced aircraft like the E-2C Hawkeye 2000, A-10 Thunderbolt II, F-5 Tiger Fighter Jet and many more.

Northrop has a long-term (three to five years) earnings growth rate of 4.2%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 3%.

Embraer (ERJ - Free Report) : The company offers a comprehensive portfolio of the most advanced aircraft in the combat market, which includes the A-29 Super Tucano light attack and advanced trainer and the C-390 Millennium military multi-mission aircraft.

ERJ delivered an average earnings surprise of 138.39% in the last four quarters. The Zacks Consensus Estimate for ERJ’s 2025 sales indicates year-over-year growth of 15.1%.

BA Stock’s Price Performance

Shares of Boeing have gained 17% in the past six months against the industry’s 8.2% decline.

Zacks Investment Research
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BA’s 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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