Boeing shares surge after new agreement with the Pentagon. Is it worth buying them?

Boeing shares rose 4% in trading on April 1 after the corporation announced a new agreement with the Pentagon. It provides for a threefold increase in the production of guidance systems for Patriot missiles within seven years.

Boeing and the U.S. Department of Defense (renamed the Department of War in 2025) have signed a seven-year framework agreement to triple production of homing heads for PAC-3 missiles, the aircraft maker said. The PAC-3 is used in the U.S. Patriot anti-missile system. The production increase is aimed at "meeting global demand for air and missile defense," Boeing said in a statement.

Shares of Boeing on this background rose by 4.2%. And during the trades the price grew even more strongly - by 5.7%, up to $210.28.

Boeing has become another company capitalizing on U.S. President Donald Trump's administration's push to quickly accelerate production of interceptor missiles to replenish stocks depleted by conflicts in the Middle East and Ukraine, Bloomberg writes.

Boeing will increase production of PAC-3 homing heads from about 650 to 2,000 units a year, meeting the Pentagon's targets under its deal with Lockheed Martin, Jefferies analyst Sheila Kahyaoglu estimated in a Bloomberg story. Boeing's revenue from homing heads could rise to about $1.8 billion a year as a result, up from about $600 million, she said.

The new agreement is in addition to the $2.7 billion contract awarded in October 2025, under which Boeing has committed to deliver more than 3,000 homing heads at a rate of up to 750 per year through 2030. In January, Lockheed Martin also signed an agreement with the U.S. to triple production of the PAC-3 MSE missiles themselves.

The Patriot contracts demonstrate the Pentagon's new procurement strategy promoted by Pete Hegseth, according to Bloomberg. It involves a shift to multi-year contracts to encourage defense companies to invest in production expansion. Hegseth said the goal is to "send a steady signal" that the U.S. wants to get advanced technology faster, the agency noted.

Boeing shares have fallen 4.5% since the beginning of 2026. By comparison, the S&P 500 broad market index has declined at a comparable rate of about 4% over the same period.

Most analysts nevertheless advise to buy securities of the aircraft corporation. They have 23 Buy and Overweight ratings out of 29 total, MarketWatch shows. Five more recommend Hold, one recommends Sell.

The average target price of $275.3 implies a 33% increase in quotes from the closing price on April 1.

This article was AI-translated and verified by a human editor