Military aircraft designers at
Lockheed Martin Corporation
(
LMT
) have received a sizeable contract worth $4 billion from U.S.
Naval Air Systems Command at Patuxent River Naval Air Station,
Maryland for 30 F-35 Joint Strike Fighters ("JSF"). However, the
final pricing of the aircraft and other terms are still under
negotiation.
The F-35 Lightning II is a family of single-seat, single-engine,
fifth generation multi-role fighters that are designed to perform
ground attack, reconnaissance, and air defense missions with
stealth capability. It is the next-generation strike aircraft for
the Navy, Air Force, Marines and U.S. allies.
As per the contract, the company will build advanced combat
aircraft and advanced avionics for the U.S. Air Force, Navy and
Marine Corps. The F-35 aircrafts will be built under low-rate
initial production lot V ("LRIP-5") for the F-35 Lightning II
program.
Originally, under the LRIP-5 program, the company had to build
35 jets. However, it was reduced to 30 jets due to the increase in
costs and delay in the fighter's development program.
For the Air Force, F-35 comes in a
conventional-takeoff-and-landing ("CTOL") version; while for the
Navy, it comes in an aircraft carrier variant ("CT") version. It
comes in a short-take-off-and-vertical-landing ("STOVL") version
for the Marine Corps. The 30 jets include 21 CTOL F-35s ordered by
the US Air Force, six CT F-35s ordered by the Navy and three STOVL
F-35s for the Marine Corps.
Lockheed Martin is the largest U.S. defense contractor with a
platform-centric focus that guarantees a steady inflow of follow-on
orders from a leveraged presence in the Army, Air Force, Navy and
IT programs.
The company continues to benefit from strong defense spending on
a number of its platform programs, such as the F-35 Lightning II
Joint Strike Fighter, C-130 Hercules & C-5 Galaxy transport
aircrafts, F-16 Fighting Falcon multi-role jet, MH-60 Helicopters,
the Littoral Combat Ship, the Aegis Weapons System for mobile and
sea-based missile defense and the Terminal High Altitude Area
Defense system.
However, we currently remain on the sidelines due to U.S.
economic fundamentals being kept on a leash as the Euro crisis
continues. Thus the risk of further cutbacks in defense budgets is
high.
The company expects to release its fourth quarter and fiscal
2011 results on January 23, 2012. The Zacks Consensus Estimates for
fourth quarter and fiscal year 2011 are currently at 1.93 per share
and $7.61 per share, respectively.
Akin to its peers,
Northrop Grumman Corporation
(
NOC
) and
Raytheon Company
(
RTN
), the company presently retains a short-term Zacks #3 Rank (Hold)
rating. We have a long-term Neutral recommendation on the
stock.
LOCKHEED MARTIN (
LMT
): Free Stock Analysis Report
NORTHROP GRUMMN (
NOC
): Free Stock Analysis Report
RAYTHEON CO (
RTN
): Free Stock Analysis Report
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