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Boeing Wins Order to Remanufacture 5 Chinooks: Time to Buy the Stock?
BABoeing(BA) ZACKS·2025-03-28 18:10

Group 1: Contract Wins and Revenue Stability - Boeing secured a 240millioncontractfromtheU.S.ArmySpecialOperationsAviationCommandtoremanufacturefiveMH−47GBlockIIChinookhelicopters,withdeliveriessetfor2027,increasingthetotalnumberofMH−47GBlockIIaircraftunderArmycontractto51[1]−TherecentmilitarycontractwinsreinforceBoeing′sprominenceindefenseaviationandensurelong−termrevenuestability,potentiallyencouraginginvestorstoconsideraddingBoeingtotheirportfolios[2]Group2:StockPerformance−Boeing′sshareshaverisen1.2240 million contract from the U.S. Army Special Operations Aviation Command to remanufacture five MH-47G Block II Chinook helicopters, with deliveries set for 2027, increasing the total number of MH-47G Block II aircraft under Army contract to 51 [1] - The recent military contract wins reinforce Boeing's prominence in defense aviation and ensure long-term revenue stability, potentially encouraging investors to consider adding Boeing to their portfolios [2] Group 2: Stock Performance - Boeing's shares have risen 1.2% year-to-date, outperforming the S&P 500's loss of 3.3%, but lagging behind the Zacks aerospace-defense industry's rise of 4.1% and the broader Zacks Aerospace sector's growth of 4.5% [3] - Other aerospace companies like Embraer and Airbus have seen significant stock gains, with Embraer up 29.4% and Airbus up 14% year-to-date [4] Group 3: Growth Drivers - Boeing has secured numerous contracts in both commercial and defense aerospace, including a landmark order from Korean Air for up to 50 widebody airplanes and an order from Japan Airlines for 17 737-8 jets [5] - The demand for air travel and the replacement of aging fleets are expected to drive the need for new jets and aftermarket services, contributing to Boeing's growth [7] - Boeing forecasts a 4.4 trillion market opportunity for commercial aviation support and services from 2024 to 2043, which should benefit its jet service business unit that had a backlog of $21.40 billion as of December 31, 2024 [8] Group 4: Earnings Estimates - The consensus estimate for Boeing's long-term earnings growth rate is 17.4%, higher than the industry's 11.2% [10] - For first-quarter 2025, Boeing's sales estimate suggests a 16.9% improvement year-over-year, while full-year 2025 sales are expected to increase by 25.7% [11] - However, first-quarter 2025 earnings estimates indicate a decline of 24.8%, while the full-year 2025 earnings estimate shows an improvement of 89.1% [11] Group 5: Challenges and Risks - Boeing faces challenges such as persistent supply-chain issues affecting the global aviation industry, which could impact operational performance [15] - The estimated number of aircraft deliveries for 2025 has dropped to 1,802, indicating a 21.4% reduction in capacity due to ongoing supply-chain issues [16] - Boeing's trailing 12-month return on invested capital (ROIC) is negative and lags behind the industry's return, suggesting insufficient returns on investments [17]