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Boeing (BA) Hits 52-Week High on Steady Flow of Contracts

On Jul 20, shares of The Boeing Company BA have soared to a new 52-week high of $211.25, before closing the trading session at $210.28. The closing price of this aerospace and defense prime, which has a market cap of around $126.9 billion, reflects a year-to-date gain of roughly 35.1%.

Over the last 52 weeks, Boeing’s shares have ranged from a low of $126.31 to a high of $211.25. The average volume of shares traded in the last three months is approximately 2.9 million.

What's Driving Boeing?

In June, at the Paris Air Show, Boeing announced the launch of the 737 Max 10, a new model that will compete with the Airbus Group's (EADSY) extremely popular narrow-body passenger jet, the A321neo.

Notably, the Max 10 is the fifth member of Boeing’s single-aisle aircraft series and the third of the Max family. It was designed to be larger than its previous model in order to increase passenger capacity compared with the A321neo’s capacity, which was outselling the 737 Max 9.

So far the decision has paid off. Evidently, Boeing received huge number of contracts for the new model leaving Airbus far behind. At the Paris Air Show, the company won 50 737 Max 10 jets orders, valued at $6.24 billion, from Lion Group. It also signed an MOU with BOC Aviation Limited for 10 737 MAX 10 airplanes, worth nearly $1.25 billion.

In addition to the aforementioned deals, Boeing grabbed notable contracts for other models at the Paris Air Show, including a commitment from the Kuwait-based ALAFCO Aviation Lease and Finance Company for 20 737 MAX 8s, valued at $2.2 billion, at current list prices.

Furthermore, the aerospace behemoth signed a memorandum of understanding (MOU) with SpiceJet, for 40 737 MAX airplanes, valued at $4.7 billion. Another MOU was signed with Tibet Financial Leasing for 20 737 MAX airplanes, valued at approximately $2.5 billion.

Apart from this, the company clinched an order from AerCap for 30 787-9 Dreamliners, worth $8.1 billion. Given enormous commercial demand in the market, Boeing is expected to witness significant traction going ahead, especially in the single-aisle market.

Notably, the second-quarter order details revealed by Boeing of late, shows that it booked 183 net commercial orders (accounting for cancellations). This reflects an increase from the year-ago figure of 171, which also will contribute significantly to the company’s top line.

In the defense arena, Trump’s proposal to boost the nation’s defense budget by 10% in 2018 from that of 2016 is likely to benefit defense biggies like Boeing, Lockheed Martin Corp. LMT, General Dynamics Corp. GD and Huntington Ingalls Industries, Inc. HII.

Again, the Trump administration has put forward the fiscal 2017 budget appropriation to expand the nation’s defense fund, citing that years of declining funding levels in the Army's investment and modernization accounts has hampered readiness of the U.S. forces. Such positive budget revisions will surely boost the company's growth trajectory as well.

Price Movement

Shares of Boeing have rallied 57.6% in the last 12 months, outperforming the industry’s gain of 27.8%. This might be because of the company’s strong balance sheet and cash flows that provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.



Zacks Rank

Boeing currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Boeing Company (The) (BA): Free Stock Analysis Report
 
General Dynamics Corporation (GD): Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT): Free Stock Analysis Report
 
Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report
 
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