Orders continue to pour in from the Department of Defense
(DoD). The DoD handed out contracts worth $1.4 billion last
Friday among which a key winner was
L-3 Communications Holdings Inc.
). Other contract winners included
Lockheed Martin Corp.
L-3 Communications won a $96.4 million contract to work on the
P-3, EP-3 and NP-3 Sustainment Modification and Installation
program. The primary tasks involve performing maintenance and
structural replacement, fabrication work on special structural
inspection kits, center wing assemblies, zone five kits, and
outer wing installations and restorations on the U.S. Navy P-3
Orion aircraft and their variants.
The work relating to the contract will take place in Waco,
Texas. The contracting activity is the Naval Air Systems Command,
Patuxent River in Maryland. The contract is anticipated to be
completed by Sep 2014.
Though not so large as some of the leading defense
contractors, L-3 Communications has maintained a healthy order
book on the back of its diversified operations and technological
upgrades. The company stands to benefit from the $14 million
government research and development tax credit, which will boost
its net profit in the upcoming quarters.
Steady foreign military sales contracts are also expected to
be a growth driver in the coming years. Recently, L-3
Communications clinched a $30 million contract from the Republic
of Korea for the supply of state-of-the-art Ground Laser Target
The 2014 defense budget saw increased investments in operation
and maintenance of major defense products to strengthen the
country's military infrastructure. Intelligence, surveillance,
and reconnaissance (ISR) programs will also remain a prime focus
of the DoD in the coming years.
We believe these positive fundamentals will keep L-3
Communications well-positioned in the sector. Currently, L-3
Communications has a Zacks Rank #3 (Hold). A better-placed
defense operator at the moment is Zacks Ranked #2 (Buy)
Northrop Grumman Corp.
L-3 COMM HLDGS (LLL): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
RAYTHEON CO (RTN): Free Stock Analysis Report
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