The Department of Defense (DoD) awarded a dozen contracts
worth $541.2 million day before yesterday. Among the contenders,
BAE Systems emerged as the clear winner securing the largest
contract worth $150 million. Another defense company,
L-3 Communications Holdings Inc.
) managed to secure a modification contract.
L-3 COMM HLDGS (LLL): Free Stock Analysis
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The contract is valued at $18.5 million and involves L-3
Communications to work on the M6.2+ Operational Flight Program at
the F-16 Mission Training Center through May 31, 2016.
The necessary modernization tasks will be carried out at
Arlington, Texas. Air Force Life Cycle Management Center/WNSK,
Wright-Patterson AFB, Ohio, is the contracting authority. This
brings the total underlying value of the contract to $316.5
Currently, defense companies, which are aggressively developing
their technological competence, are emerging as the big contract
winners and L-3 Communications is not left far behind. This is
evident from the company's platform and logistics business, which
has been a major revenue churner posting 4.9% year-over-year
growth in the second quarter.
Modification, support and sustainment systems contracts have
lately dominated the company's order book. Contract flows from
international clients have been quiet generous too. In mid-Aug
2013, L-3 Communications clinched a whopping $669 million
contract from the Government of Canada to provide complete
in-service support services ("ISS") for the country's CC-150
The U.S. government also intends to focus more on strengthening
its existing defense capabilities which explains the slew of
support, maintenance and modifications contracts from the
Department of Defense.
We believe the combination of foreign military sales contracts
and intermittent low-priced modification contracts in the U.S.
will help maintain a stable revenue stream for L-3
At the moment, L-3 Communications carries a Zacks Rank #3 (Hold).
However, other defense players to look out for are Zacks Ranked
Lockheed Martin Corp.
Northrop Grumman Corp.