Jefferies Affirms Boeing (BA) at 'Buy' Following Receipt of $2.8B DoD Contract Modification for KC-46 Tanker

Jefferies affirms Boeing (NYSE: BA) at Buy with a price target of $165 following news that the DoD awarded the company a $2.81 billion contract for 19 LRIP KC-46 aircraft.

The firm commented today: The award obligates the full $2.8 billion, which will fund the assembly of the aircraft. At the end of the second quarter of 2016, the company had capitalized precontract costs of $1.56 billion, largely related to the KC-46 Tanker. The award recognizes the company has completed the testing for the plane to perform its mission. We would expect that serial production of the aircraft should be accomplished with far less disruption than was experienced during the development program. In time, we believe the plane can be used for other applications that could range from cargo to ISR. Current plans call for the company to build 179 of the aircraft. The Pratt & Whitney unit of United Technologies supplies the engines.

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