The U.S. military is unfazed by any concerns about Boeing's supply chain. The Pentagon awarded Boeing (BA) two major contracts worth more than a combined $7 billion.

Boeing stock rose over 2% on Wednesday after news of the Pentagon contracts broke.

Boeing's Pentagon Contracts

The Army awarded Boeing a $4.7 billion contract to build new Apache helicopters. The agreement includes new Apache AH-64E model helicopters, the Longbow flight simulators pilots use as part of their training regimen, and a suite of accessories.

The other contract was with the Air Force for an additional 15 KC-46A Pegasus tankers, valued at $2.47 billion. Pegasus tankers are used for aerial refueling of other planes. The addendum was part of a long-term Lot 12 contract.

These latest contracts come after Boeing secured several high-profile commercial contracts during the Dubai Airshow, one of the aviation industry's largest trade shows. Investors might welcome the sign of faith from the Pentagon, given Boeing's production woes. After several headline-grabbing malfunctions in 2024 Boeing had been forced to slow down its factory output under heightened scrutiny from regulators.

Boeing Stock

That contributed to Boeing stock's decline of almost 30% since the start of 2024. More recently its been on a three-month losing streak.

Last month Deutsche Bank downgraded Boeing from Buy to a Hold rating and lowered its price target from $255 to $240 on the grounds that the company's cash flows would be lower than anticipated. The downward revisions came after Boeing pushed back the delivery date of its new 777X model, which resulted in a $5 billion charge.

The stock dropped 5% on the day Deutsche Bank released its analysis.

So far this year, Boeing is up only about 5%, about a third of the S&P 500's 16% growth rate. Meanwhile, perpetual rival Europe's Airbus (EADSY) is up more than 47%. As Boeing languishes, some of its suppliers have had strong years in the stock market. The prospect of a Boeing with renewed production capabilities has made many of its vendors attractive buys. The likes of Woodward (WWD), GE Aerospace (GE) and Rolls Royce (RYCEY) have all had stellar years.

Woodward, which supplies jet engine parts, on Tuesday reported record revenue of $3.567
billion for fiscal 2025. Its stock is up 75% year to date. The two jet engine manufacturers GE and Rolls Royce are up 75% and 95%, respectively, since the start of the year. That's due in part to the expectation that their business will ramp up alongside Boeing's.

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