Boeing Co. share price up, to split federal funding of $6.8 billion with SpaceX to create American space taxis

Boeing Co. was awarded a contract valued at about $4.2 billion by NASA. The company will split federal funding of as much as $6.8 billion with its competitor Space Exploration Technologies Corp. in order to help the U.S. resume manned missions and cut its reliance on Russian rockets.

As reported by the Financial Times, NASA administrator Charles Bolden shared that the decision would open “the most ambitious and exciting chapter in the history of Nasa and human space flight”. He added that the contracts with the two companies highlight the U.S. governments desire to “not be dependent on any other nation to get into space”.

The National Aeronautics and Space Administration said in an official statement that both Boeing and SpaceX are getting contracts to develop, test and fly space taxis to carry U.S. astronauts to the International Space Station. According to the statement, the third rival – Sierra Nevada Corp. was excluded from the competition.

No further details about the contracts were provided by NASA, which explained that both Boeing and SpaceX are expected to undoubtedly show that their systems meet its safety and operating standards. NASA also said that a test flight with an astronaut is expected to be conducted in 2017.

The contracts put an end to the competition over building the first U.S. manned crafts since 2011. The two awarded companies spacecraft will replace the Russian systems, which are currently the only ones that provide astronauts with access to the International Space Station.

“It’s entirely possible that we wake up one day and the Russians say, ‘We’re not taking your astronauts up anymore,’” said for Bloomberg Marco Caceres, director of space studies at Fairfax, Virginia-based consultant Teal Group. “NASA’s anticipating this possibility. That’s why they want to move as quickly as possible with this program.”

Boeing Co. rose by 0.80% on Tuesday in New York to close at $127.32 per share, marking a one-year change of +10.07%. The company is valued at $91.75 billion. According to CNN Money, the 22 analysts offering 12-month price forecasts for Boeing Co. have a median target of $159.50, with a high estimate of $175.00 and a low estimate of $101.00. The median estimate represents a +25.27% increase from the last price of $127.32.