F-35 Pilot Outfitter Survitec Weighs Unit Sale in Defense Boom
Searchlight Capital Partners is exploring a sale of Survitec 's aerospace and defense business, which provides safety and survival equipment including for F-35 fighter pilots, according to people familiar with the matter.
The buyout firm is working with Houlihan Lokey Inc. to gauge buyer interest in the Survitec unit from companies and financial investors, said the people, who asked not to be identified because talks are private.
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Yahoo
an hour ago
- Yahoo
Boeing Gains 11% in a Year: Is This the Right Time to Buy the Stock?
Shares of The Boeing Company BA surged a solid 10.8% over the past year. However, the aerospace giant lagged the S&P 500's return of 11.9%. The stock has also underperformed the Zacks aerospace-defense industry's rise of 21.7% and the broader Zacks Aerospace sector's growth of 21.3% in the said time frame. Image Source: Zacks Investment Research Shares of other aerospace bigwigs like Embraer ERJ and Airbus Group EADSY have also risen considerably over the past year and outperformed Boeing. Notably, shares of Embraer and Airbus have gained 59.5% and 10.5%, respectively. Boeing has been making notable strides in the stock market lately, supported by multiple contract wins, solid financial position and improved revenue performance in its commercial airplane business, which has been struggling in recent years. This, in turn, must have boosted investors' confidence in BA and thereby led to its aforementioned share price hike. Evidently, Boeing's revenues from the commercial aerospace segment surged 75% year over year to $8.15 billion in the first quarter of 2025, driven by higher jet deliveries. Meanwhile, the company's defense unit won key contract awards worth $4 billion in the first quarter, which resulted in a solid backlog amount of $61.57 billion for this segment as of March 31, 2025. Such solid contract wins and subsequent backlog count are indicative of the solid demand that Boeing's products enjoy in the defense market. Moreover, Boeing's cash and cash equivalents (along with short-term and other investments) at the end of the first quarter of 2025 totaled $23.67 billion. Its long-term debt was $45.69 billion, while current debt, as of March 31, 2025, was $7.93 billion. After a comparative analysis of the aforementioned figure, one may safely conclude that the American jet giant holds a strong solvency position, at least in the near term. Rising air travel and an aging global fleet are driving demand for new jets and aftermarket services, which, in turn, bodes well for the Boeing Global Services ('BGS') unit. To this end, Boeing forecasts a $4.4-trillion market opportunity for commercial aviation support and services during 2024-2043. With a strong $22.04 billion backlog, as of March 31, 2025, the BGS unit is thus well-positioned for sustained long-term expansion, backed by the aforementioned market growth opportunity. The rapidly growing commercial air travel also bodes well for other aerospace giants like Embraer and Airbus, which actively serve the commercial aftermarket services market through their Embraer Services & Support and Airbus Services units, respectively. Boeing's long-term defense outlook also remains strong, supported by rising U.S. defense spending and major program involvement, such as the F-47 Next Generation Air Dominance platform. Notably, in May 2025, the U.S. President proposed an increase of 13% in the nation's defense spending (to $1.01 trillion) for fiscal 2026. This should boost growth potential for Boeing's defense offerings in the years ahead. In line with this, the Zacks Consensus Estimate for BA's long-term (three-to-five years) earnings growth rate is pegged at 18.1%, higher than the industry's 11.8%. Now, let's take a sneak peek at the company's near-term estimates to understand whether the figures mirror similar growth prospects. Boeing's estimate for second-quarter 2025 sales suggests an improvement of 18.1% from the year-ago quarter's reported figure, while that for full-year 2025 sales indicates a rally of 25.6%. A similar improvement trend can be observed from its 2026 sales estimates. Its quarterly as well as yearly earnings estimates also reflect similar robust performance on a year-over-year basis. Additionally, an upward revision has been observed in the company's 2025 and 2026 earnings estimates over the past 60 days. This indicates that investors are gaining confidence in the stock's earnings-generating capabilities. Image Source: Zacks Investment Research Image Source: Zacks Investment Research While Boeing presents strong growth potential, it also faces key challenges that investors should weigh carefully. Despite a recovery in air travel driving demand for commercial aircraft, persistent global supply-chain disruptions, especially shortages of critical parts, continue to hinder and are expected to affect the aviation industry in 2025. This remains a major risk for jet manufacturers like Boeing, Airbus and Embraer. Additionally, newly imposed U.S. tariffs on imported goods may worsen existing disruptions, causing further delays in sourcing components essential for Boeing's jet production. These delays could raise manufacturing costs and strain production timelines, making it difficult for Boeing to meet delivery commitments. Such operational setbacks may weigh on its financial performance and weaken investor sentiment. The image below shows that BA stock's trailing 12-month return on invested capital (ROIC) not only lags the peer group's average return but also reflects a negative figure. This suggests that the company's investments are not yielding sufficient returns to cover its expenses. Image Source: Zacks Investment Research However, the ROIC of its peers, Embraer and Airbus, is currently better than that of Boeing. While the ROIC for ERJ is currently 14.24, the same for EADSY is 4.71. In terms of valuation, Boeing's forward 12-month price-to-sales (P/S) is 1.78X, a premium to its peer group's average of 1.75X. This suggests that investors will be paying a higher price than the company's expected sales growth compared to that of its peer group. The stock's forward 12-month P/S also seems stretched when compared to its five-year median value, 1.41. Image Source: Zacks Investment Research To conclude, investors interested in Boeing should wait for a better entry point, considering the stock's poor ROIC and premium valuation. BA currently has a VGM Score of F, which is also not a very favorable indicator of strong performance. However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, considering its recent share price hike, solid sales and earnings growth potential as well as upward revision in annual earnings estimates. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Boeing Company (BA) : Free Stock Analysis Report Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report Airbus Group (EADSY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
4 hours ago
- Business Insider
Investors Sound the Retreat on Lockheed Martin Stock (LMT) as the Pentagon Cuts Spending
Lockheed Martin (LMT) stock took a beating on Wednesday after the Pentagon reportedly cut its F-35 jet orders in half this year. The latest reports claim that the Air Force has only requested 24 of these jets from the aerospace and defense company, compared to 48 last year. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter It's not just the Air Force that wants fewer of Lockheed Martin's F-35 jets. The reports also claimed that the Navy has only requested 12 jets, despite approval for 17 of them. The Marines are also expected to seek fewer of the jets this year. This is bad news for Lockheed Martin stock, as the F-35 business make up roughly 30% of the company's revenue. Strong demand in 2024 resulted in 110 units being sold, but lower orders from the U.S. will likely cut into the company's revenue this year. LMT Stock Movement Today The reports of reduced F-35 requests weighed on LMT stock today, sending the company's shares 6.04% lower as of this writing. This builds on the stock's 6.42% decline year-to-date and eats away at its 3.87% increase over the past 12 months. LMT stock also saw heavy trading today, with more than 1.42 million shares exchanged. That's above its three-month daily average trading volume of about 1.22 million units, signaling a potential selloff by investors. Is Lockheed Martin Stock a Buy, Sell, or Hold? Turning to Wall Street, the analysts' consensus rating for Lockheed Martin is Moderate Buy, based on seven Buy and eight Hold ratings over the past three months. With that comes an average LMT stock price target of $521.07, representing a potential 16.05% upside for the shares. Spark, TipRanks' AI analyst, rates Lockheed Martin an Outperform (77) with a $532 price target, suggesting an 18.55% upside for LMT shares. It cites 'consistent revenue growth and strong cash flow management' as positives for the stock.
Business Insider
6 hours ago
- Business Insider
Lockheed Martin shares sank as much as 7% after a report that the Pentagon is halving F-35 requests for the Air Force
Lockheed Martin shares dropped as much as 7% on Wednesday after news that the Pentagon is asking for half of the F-35s it initially forecast for the Air Force. The defense contractor's shares recovered to $456 at market close, or about 4.2% lower from $476, the price at the end of Tuesday's trading day. Bloomberg reported on Wednesday that a procurement document sent to Congress indicated the Defense Department is requesting only 24 F-35 Lightning II Joint Strike Fighters for the Air Force, down from 48 that officials projected in the last fiscal year. Per the outlet, the document also proposed 12 F-35s for the Navy and 11 for the Marine Corps, down from 17 and 13 fighters, respectively. Business Insider could not independently verify Bloomberg's report. The Pentagon did not respond to a request for comment sent outside regular business hours. The US is by far Lockheed Martin's biggest customer for the F-35, with plans to buy 2,456 of the aircraft over several decades. The Air Force is supposed to eventually receive 1,763 of that total. When asked to comment on a possible reduction of local F-35 purchases this year, a Lockheed Martin spokesperson told BI in a statement that the fighter is "combat proven, offers the most advanced capability and technology, and is the most affordable option to ensure the US and allies remain ahead of emerging threats." "We will continue to work closely with the Administration, Congress, and our customers to deliver this game-changing capability as the budget process continues in the months ahead," the spokesperson added. A reduced ask for F-35s can potentially be changed by Congress, which is still deliberating on official defense funding for the 2025 fiscal year ending on September 30. Lawmakers have shown they're willing to fund the advanced stealth fighter beyond the Pentagon's requests. When the Air Force requested 48 F-35s from Congress last year, it was instead offered money for 51 of the planes. Doubling the requested budget, however, would be a huge jump from that smaller boost. The Pentagon is shifting its budget The reported change could also signify an internal reshaping of the Pentagon's spending priorities under the Trump administration. In February, Defense Secretary Pete Hegseth asked officials to slash 8% of expenses from existing programs over the next five years so the money could be directed to Trump-favored initiatives. His announcement highlighted 17 categories protected from cuts, and the F-35 was not one of them. All of this comes as those in Trump's circles have publicly criticized the F-35 for its cost and relevance amid the rise of drone warfare. Right-wing commentator Laura Loomer, for example, slammed the F-35 program in April as a "scandal that's been quietly draining our nation's resources." And last month, Florida GOP Rep. Matt Gaetz posted on X that the fighter program was a "$1.7 trillion disaster." While some, like Elon Musk, have suggested that drones make crewed fighters obsolete, the US military says it wants to marry the two concepts instead of abandoning the latter. The Air Force has said combining crewed fighters with drone wingmen is a key priority for the F-47, its next-generation air dominance fighter. Lockheed was in the running to produce that fighter, but lost out to Boeing. However, Lockheed CEO Jim Taiclet has said that his firm wants to enhance the F-35 using the tech it created for the failed bid. Taiclet said that plans include automating the sixth-generation fighter and juicing it up to provide most of the capabilities of the F-47 for a fraction of the cost.
