BAE share price falls despite multimillion US Air Force deal

on Mar 9, 2015
Updated: Oct 21, 2019

BAE Systems Plc (LON:BA) has been awarded a new three-year contract to provide management support by the US air force. The initial award payment is valued at $3 million and the total value over the span of the deal is estimated at $37 million (£24.5 million).

Europe’s largest defence manufacturer’s experts will offer assistance for the management of obsolete parts through the use of the company’s Advanced Component Obsolescence Management (AVCOM) tool. The web-enabled system allows its users to forecast when a component will become obsolete or too expensive, after which a suitable substitute is sourced from the market.
DeEtte Gray, president of the group’s Intelligence & Security sector, wrote as part of the announcement that the company’s management system delivers substantial cost reductions of a system or a platform through “efficiently resolving difficult part obsolescence issues”. Gray also claims that the system provides “advanced planning capabilities for managing the full life-cycle needs of a product“.

The US Air Force has used AVCOM in its obsolescence management programmes for over 24 years since 1991. BAE Systems has held the obsolescence management contract with the Air Force’s Strategic Alternative Sourcing Program Office for the past five years. Work on the latest deal will take place at a number of the company’s facilities in the US, and will help with the support of Air Force operations from across the globe.

As of 14:08 GMT today, BAE’s share price stood at 534.50p, down 0.47 percent intraday, in line with the the benchmark FTSE 100 index which has slipped into negative territory. Despite today’s drop, the British manufacturer’s stock has climbed nearly 14 percent since the turn of the year.
According to the Financial Times, as of 07 March, 2015, the consensus forecast amongst 28 polled investment analysts covering BAE Systems plc has it that investors should hold their position in the company. The median target of the 18 analysts offering 12 month price targets is 532.5p with a low estimate of 385.00p and a high estimate of 615.00p.
As of 15:02 GMT, Monday, 09 March, BAE Systems plc share price is 532.75p.

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