L-3 Communications Holdings Inc.
) has won a $321.8 million fixed-price contract for 10 C-27J
aircraft, 10 option kits, and associated equipment for the
Commonwealth of Australia. Work on the contract is expected to be
completed by May 24, 2012.
Australia selected the C-27J aircraft for its multifunctional
ability. The aircraft is capable of logistical re-supply, medevac,
troop movement, airdrop operations and humanitarian assistance.
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.
L-3 Communications recently increased its revenue guidance range
for full-year 2012 to $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 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
The company presently retains a short-term Zacks #3 Rank (Hold)
that corresponds with our long-term Neutral recommendation on the
(CYLU): ETF Research Reports
FLIR SYSTEMS (FLIR): Free Stock Analysis Report
L-3 COMM HLDGS (LLL): Free Stock Analysis
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