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How Boeing, GE And Raytheon Shares Are Reacting To $1.3B In New US Defense Contracts

Published 30/11/2022, 17:32
Updated 30/11/2022, 18:40
© Reuters. How Boeing, GE And Raytheon Shares Are Reacting To $1.3B In New US Defense Contracts

Benzinga - Raytheon (NYSE:RTN) Technologies Corp (NYSE: RTX), Rolls-Royce (LON:RR) Holding PLC ADR (OTC: RYCEY), Boeing Co (NYSE: NYSE:BA) and General Electric Company (NYSE: NYSE:GE) got some good news from the U.S. Department of Defense this week when each company was awarded new defense contracts.

The Contracts: Raytheon's Pratt & Whitney was awarded a $511.5 million contract from the U.S. Navy for F135 propulsion system annual sustainment. The deal includes program management, replenishment of spare parts, propulsion integration and engine support.

Related Link: Credit Suisse (SIX:CSGN) Picks 7 Aerospace, Defense Stocks To Buy — And 4 To Avoid

In addition, Raytheon Missiles and Defense was awarded an $84 million contract by the Army for 155mm Excalibur Increment lb projectiles.

Boeing was awarded a $399 million firm-fixed-price modification contract by the Air Force for the delivery of two KC-46A aircraft for the Japan Fleet.

"With a price tag of $200mn per aircraft, we estimated this is 2x the price of the passenger version and brings the overall face value of the contract to $1,305mn," Bank of America (NYSE:BAC) analyst Ronald Epstein said Wednesday.

Rolls Royce was awarded a $228 million firm-fixed-price, indefinite-delivery/indefinite-quantity contract (IDIQ) by the Navy for engineering and logistics support services for KC-130J propulsion systems.

Finally, GE was awarded a $157 million firm-fixed-price, IDIQ modification contract by the Navy for propeller engineering reliability and logistic support for the KC-130J R391 propeller system.

Related Link: Russian Crypto Billionaire Killed In Helicopter Crash: 19th Tycoon To Mysteriously Die Since Putin's Ukraine Invasion

Here's a rundown of how the impacted stocks reacted to the new contracts on Wednesday:

  • GE was down 1.5%.
  • Raytheon was down 1%.
  • Boeing was up 0.6%.
  • Rolls Royce was up 2.3%.
Benzinga's Take: The new contracts are relatively modest in size compared to the massive budget of the Department of Defense. Aerospace and defense stocks are considered defensive investments because they generate so much of their revenue from long-term government contracts. Several of these stocks have been top S&P 500 performers in 2022. Northrop Grumman Corp (NYSE: NYSE:NOC) is up 36.5% year-to-date, while Lockheed Martin Corp (NYSE: NYSE:LMT) is up 36.1% and Huntington Ingalls Industries Inc (NYSE: HII) is up 22.1%.

Image via Pixabay

Latest Ratings for BA

DateFirmActionFromTo
Mar 2022Cowen & Co.MaintainsOutperform
Jan 2022JefferiesMaintainsBuy
Jan 2022 Morgan Stanley (NYSE:MS)MaintainsOverweight
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© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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