Lockheed Martin Corporation ( LMT )
has received a contract from the U.S. Government worth $1.85
billion for the up gradation of 145 Block 20 F-16A/B aircraft for
the Republic of China ("RoC").
To date, Lockheed has upgraded more than 1,000 F-16s for the U.S.
Air Force as well as international customers. Per the contract, the
company will also add Active Electronically Scanned Array (AESA)
radar, implant global positioning, as well as improve the
electronic warfare and other avionics systems of Taiwan's
In February, the company had introduced a new version of F-16. It
consists of AESA radar, an upgraded mission computer and
architecture, and improved cockpits. AESA radars offer significant
operational capability improvements.
Off late, the company has been winning new contracts for F-16 in
Morocco, Egypt, Oman and Iraq and carrying the production line
through 2015. The company is looking for opportunities that would
take the production line through 2016-17. Globally, more than 4,500
aircraft have been supplied from assembly lines in five
countries. Moreover, major up gradation processes are being
built in the F-16 versions in order to keep the fleet modern and
fully supportable over the aircraft's long service life.
Meanwhile, the company has received a contract from U.S. Coast
Guard for three additional HC-130Js for $218 million, which will
bring the total number of HC-130Js to nine from six. Per the
contract, the company will also provide two mission suites that are
important for the U.S. Coast Guard search and rescue
operations. The new aircraft are scheduled to be delivered in
Lockheed Martin is the largest U.S. defense contractor that
guarantees a steady inflow of follow-on orders from a leveraged
presence in the Army, Air Force, Navy and IT programs. Moreover,
the company's diversified business nature protects it from various
Going forward, we expect the company to benefit from a strong
defense focus on a number of its platform programs, such as the
C-130 Hercules & C-5 Galaxy transport aircrafts, F-16 Fighting
Falcon multi-role jet, MH-60 Helicopters, the Advanced Extremely
High Frequency & the Global Positioning Satellite III system
satellites, the Littoral Combat Ship, the Aegis Weapons System for
mobile and sea-based missile defense and the Terminal High Altitude
Area Defense system.
The company presently retains a short-term Zacks #2 Rank (Buy).
We have a long-term Outperform recommendation on the stock.
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Based in Bethesda, Maryland, Lockheed Martin is a global security
and aerospace company that is principally engaged in the research,
design, development, manufacture, integration and sustainment of
advanced technology systems, products and services. The company
mainly competes with General Dynamics Corporation
( GD )
and Northrop Grumman Corporation ( NOC