The Boeing Company BA recently secured a modification contract to remanufacture Block I CH-47F Chinook helicopter into Block II. The award is expected to be completed by Dec. 31, 2026. 

Valued at $113.1 million, the contract has been provided by the Army Contracting Command, Redstone Arsenal, AL.

What’s Favoring Boeing?

As nations across the globe continue to strengthen their defense structures, spending on military arms and ammunition that boast technologically advanced features continues to increase manifold. This also includes increased investments in military helicopters that play a critical role in air warfare missions. Consequently, aerospace manufacturers like Boeing enjoy a solid inflow of contracts for their combat-proven helicopters. 

Notably, Boeing’s CH-47 Chinook is an advanced, multi-mission, tandem-rotor helicopter, proven in cargo and troop transport, search and rescue, casualty evacuation, special operations, humanitarian and disaster relief, and more. Its Block II variation is powered by cutting-edge technologies, including redesigned fuel tanks, a strengthened fuselage and an improved drivetrain, all of which enable soldiers to meet today’s heavy-lift mission requirements.

Such remarkable features of this aircraft must have been boosting its demand. The latest contract win bears a bright example of that.

Considering the fact that CH-47 is the heavy-lift helicopter of choice for the U.S. Army and 20 international operators, with more than 950 Chinooks deployed worldwide, we may expect Boeing to win more similar contracts involving sustainment parts supply in the near future.

BA Stock’s Growth Prospects

The demand for combat helicopters has been rising significantly in recent times, backed by increasing defense investments by nations worldwide amid escalating military conflicts, with these helicopters equipped with advanced weaponry and surveillance systems to ensure superior aerial security. The ability of combat helicopters to perform multiple roles, such as troop transport, reconnaissance and close air support, has amplified their demand over the past decade. 

The Mordor Intelligence firm expects the military helicopters market to witness a CAGR of more than 2.9% during the 2024-2030 period.

Such expanding market prospects should boost Boeing’s growth, thanks to its established position in manufacturing combat helicopters like the AH-64 Apache, MH-139, and AH-6 light attack helicopters, as well as the Ch-47 Chinook.

Opportunities for Peers

Other defense primes that are expected to reap the benefits of the military helicopter market have been discussed below.

Airbus EADSY is one of the world's largest suppliers of advanced military helicopters. Some of its military helicopters are H125M, H135, H145M, AS565MBe, H160M, H175M, H215M, H225M, etc.

Airbus boasts a long-term earnings growth rate of 10.5%. The Zacks Consensus Estimate for EADSY’s 2024 sales indicates an improvement of 5.1% from the 2023 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 renowned 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 4.5%. The consensus estimate for 2024 sales indicates an improvement of 5.4% from the 2023 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 10.1%. The consensus mark for TXT’s 2024 sales indicates an improvement of 1.2% from the 2023 reported number.

Price Movement

Shares of Boeing have lost 42.2% in the year-to-date period compared with the industry’s 9% decline.

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Zacks Rank

Boeing currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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