L-3 Communications Holdings Inc.
) was awarded an indefinite-delivery/indefinite-quantity contract
to supply portable satellite-communications gear to the U.S.
Special Operations Command. The anticipated period of performance
is not to exceed five years. U.S. Special Operations Command,
MacDill Air Force Base, Florida, is the contracting activity.
The guaranteed contract has a minimum value of $7.6 million with
a potential value of up to $500 million over the next five years.
Work on the contract will be done in Victor, New York.
L-3 Communications Holdings operates through its wholly owned
subsidiary, L-3 Communications Corporation. L-3 Communications is a
leading supplier of a broad range of products and services used on
a number of aerospace and defense platforms. In addition, the
company is a prime system contractor for aircraft modernization and
maintenance; ISR collection platforms; simulation and training; and
government systems support services. The company reported fiscal
2011 sales of $15.2 billion.
Going forward, L-3 Communications expects its revenue for
full-year 2012 to be in the range of $14.6 billion to $14.8 billion
versus its prior expectation of $14.4 billion to $14.6 billion. The
company expects operating margin of 10.1% and EPS in the range of
$8.45-$8.60 for fiscal 2012.
L-3 Communications remains a key player within the defense
segment and mainly competes with
FLIR Systems Inc.
Cyalume Technologies Holdings Inc.
). We believe it is one of the best-positioned pure defense plays
by virtue of its non-platform focus and a broad diversification of
L-3 Communications is strengthening itself by focusing on
improvement of operational efficiencies, investing in research and
development to provide affordable solutions, acquiring businesses
that will add new capabilities and expanding product lines and
divesting businesses. Moreover, its broad diversification of
programs would provide growth momentum. Going forward, we expect
future growth to come from the company's strong presence in the
current focus areas of C3ISR equipment; precision-guided weapons;
unmanned aerial vehicles ("UAVs"); and other electro-mechanical
However, we are concerned about the loss of key contracts,
defense spending cuts and lack of near-term catalysts. Order growth
and volume increases also remain dubious in this challenging
L-3 Communications presently retains a short-term Zacks #3 Rank
(Hold) that corresponds with our long-term Neutral recommendation
on the stock.
(CYLU): ETF Research Reports
FLIR SYSTEMS (FLIR): Free Stock Analysis Report
L-3 COMM HLDGS (LLL): Free Stock Analysis
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