Key Stats for Boeing Stock
- Price change for Boeing stock in last 6 months: -9%
- $BA Stock Price as of Oct. 6: $193
- 52-Week High: $254
- $BA Stock Price Target: $273
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What Happened?
Boeing (BA) said on Monday that Lockheed Martin awarded it a seven-year contract worth about $14.7 billion. The deal covers PAC-3 Missile Segment Enhancement (MSE) seekers.
The seeker is the missile’s guidance part. It finds and tracks incoming targets and helps the missile hit them.
PAC-3 MSE is used in the Patriot air defense system. It can counter ballistic missiles, cruise missiles and aircraft.
The contract lets Boeing triple its production of these seekers. The demand is easy to explain. Conflicts in Iran and Ukraine are straining US weapons stockpiles.
In July, the US Army gave Lockheed a contract worth up to $58.6 billion to boost PAC-3 production. In January, Lockheed also agreed to raise yearly capacity to 2,000 units, up from about 600.
There is one catch.
Industry executives say Congress has not yet funded these deals. Until lawmakers act, contractors may not be able to invest at full scale in parts and facilities.
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What the Market Is Telling Us About Boeing Stock
This is good news for Boeing’s defense business. But it is a long-term deal, so it does not change results overnight.
Boeing stock may get a lift from the headline, but the real impact will show up over several years.
The defense side has been improving. In Q2, Boeing Defense, Space & Security revenue rose 13% to $7.5 billion. The unit booked $7 billion in new orders. Its backlog stands at $85 billion.
Margins are still thin, though. Defense margin was negative 0.2% after a $280 million charge on the VC-25B program. Without that charge, it was 3.5%.
Management expects steady improvement and a return to high single-digit margins by the end of the decade.
The wider company is also gaining ground. Total revenue was $24.6 billion, up 8%. Free cash flow was positive $631 million. Boeing’s total backlog is a record $715 billion.
So the new contract adds to an already large order book. Anyone watching Boeing stock will want to see if Congress funds these deals.
Investors who own Boeing stock should also watch how Boeing handles its fixed-price defense programs, since those have caused charges before.
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So what is Boeing stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
