Lockheed Martin Corp.
) has received a contract worth $852.3 million from the U.S.
Department of Defense (DoD) to provide the required equipment for
F-35 fighter jets under Low Rate Initial Production Lot 6
(LRIP-6). This contract is slated for completion in Dec 2016.
This is a modification contract to an existing contract that
calls for Lockheed Martin to supply particular tooling and
special test equipment for the U.S. Navy, U.S. Air Force and
their international associates. These are critical in maintaining
the current F-35 delivery schedules and meeting future production
Recently, the DoD and Lockheed Martin clinched a deal for the
lots 6 and 7 low-rate initial production (LRIP) contracts for the
F-35 Lightning II joint strike fighter (JSF) aircraft. This
agreement was signed after six months of negotiations and
included the supply of 71 fighters at reduced prices. This will
eventually enable the Pentagon to procure all originally planned
aircraft regardless of budget sequestration.
The largest U.S. defense contractor, Lockheed Martin, is poised
to benefit from its variety of product offerings, strong program
execution and cost reduction measures. This focus guarantees a
steady inflow of follow-on orders from a leveraged presence in
the Army, Air Force, Navy and IT programs.
During the second quarter of 2013, the company's Aeronautics
division witnesses a marginal decrease in revenues on a
year-over-year basis due to lower sales from F-16, F-22 and C-130
programs. However, higher sales from F-35 and C-5 programs partly
offset the negatives. Lockheed Martin finished the second quarter
with $75,100 million of backlog. Of this, $26,500 million,
comprising more than 35%, belonged to the Aeronautics segment.
We expect the company to continue to benefit from a strong
defense focus on a number of its programs, such as the C-130
Hercules and C-5 Galaxy transport aircraft, F-16 Fighting Falcon
multi-role jet, MH-60 helicopters, the Advanced Extremely High
Frequency & the Global Positioning Satellite III system
satellites, the Littoral Combat Ship, the Aegis Weapons System
for mobile and sea-based missile defense and the THAAD system.
The company presently retains a short-term Zacks Rank #2 (Buy).
Other stocks worth considering in the space include
Huntington Ingalls Industries, Inc.
Northrop Grumman Corp.
General Dynamics Corp.
), all with a Zacks Rank #2 (Buy).
GENL DYNAMICS (GD): Free Stock Analysis
HUNTINGTON INGL (HII): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
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