TLDR
- Boeing shares gained 2% Wednesday following a Pentagon contract award exceeding $20 billion.
- The contract involves developing the Navy’s next-generation F/A-XX Strike Fighter.
- Northrop Grumman was defeated by Boeing in the competition.
- This victory follows Boeing’s 2025 F-47 fighter jet contract with the Air Force.
- Morgan Stanley identified Boeing as a tactical buy opportunity before an important labor vote.
Shares of Boeing (BA) advanced 2% Wednesday following the Pentagon’s decision to award the company a significant Navy contract over competitor Northrop Grumman (NOC).
The agreement encompasses the development of the next-generation F/A-XX Strike Fighter. Pentagon sources indicate the full development phase carries a value exceeding $20 billion.
This marks Boeing’s second significant fighter aircraft contract in less than 24 months. In March 2025, the Air Force selected Boeing for the F-47 program.
Combined, these contracts position Boeing as the primary developer of advanced fighter platforms for both naval and air force branches—an unusual concentration of responsibility for a single defense contractor.
Industry observers weren’t surprised by the announcement. BNP Paribas aerospace and defense analyst Matthew Akers noted that Boeing had been viewed as the frontrunner following last year’s F-47 award.
What this contract means for Boeing’s production facilities
The award bolsters Boeing’s defense sector during a challenging period for its commercial aviation division. The contract also provides a significant boost to the company’s St. Louis manufacturing hub.
Boeing has been making capital investments in expanded production capabilities at that location. Company officials have indicated the facility was designed to handle concurrent production of multiple advanced aircraft programs.
Despite Wednesday’s gain, Boeing stock remains down 13% for the year. September alone saw a 10% decline driven by a software defect, 737 MAX 10 certification setbacks, and an expiring labor agreement.
In a research note issued Tuesday, Morgan Stanley addressed these headwinds. The investment bank maintained its Equal-weight rating alongside a $250 price target for Boeing.
That target represents approximately 33% potential upside from the current trading level around $187. Morgan Stanley characterized the period before the Oct. 1 labor vote as a potential tactical entry point.
The upcoming labor vote drawing investor attention
The Society of Professional Engineering Employees in Aerospace serves as the bargaining representative for Boeing’s technical and engineering workforce. Voting on a revised contract proposal concludes Oct. 1 at noon Pacific, with tallying expected later that day.
Approval would eliminate a key near-term uncertainty for Boeing. Rejection would establish Oct. 7 as the earliest potential strike date, although a no vote doesn’t automatically trigger a work stoppage.
Historical precedent provides perspective. SPEEA has conducted one full strike against Boeing—a 40-day action in 2000—plus a single-day walkout in 1993.
This contrasts sharply with the IAM machinists union’s seven strikes against Boeing between 1948 and 2008. SPEEA’s bargaining councils are currently advising members to approve the proposed agreement.
Meanwhile, Boeing’s 737 MAX 10 program continues facing uncertainty. FAA statements have indicated potential certification postponements related to a software problem already impacting MAX 7 deliveries.
According to Cirium data, the MAX 10 represents approximately 24% to 25% of Boeing’s projected 2027 order book. Some exposure could potentially be mitigated through customer conversions to MAX 8 or MAX 9 models.
Boeing’s second-quarter earnings, released July 28, reflected revenue of $24.6 billion alongside 171 commercial aircraft deliveries. The company reported a GAAP loss of $0.67 per share, with quarterly free cash flow reaching $0.6 billion.
Boeing’s overall backlog expanded to a company-record $715 billion, encompassing over 6,200 commercial aircraft. Results from the Oct. 1 labor vote are anticipated that afternoon.
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