Lockheed Martin Expands its Space Systems Unit - Analyst Blog

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Prime defense contractor Lockheed Martin Corp. ( LMT ) seems to be on an acquisition spree as the company announced that it has inked a deal to buy Zeta Associates, Inc. The details of the buyout were kept under wraps and the transaction is subject to customary closing conditions.

The acquisition is anticipated to be completed in the third quarter of 2014. Following the completion of the acquisition, Zeta Associates will merge with Lockheed Martin's Space Systems division.

Good news also poured in at Lockheed's Space Systems as it clinched a $38.4 million U.S. Air Force modification contract for the Advanced Extremely High Frequency ("AEHF") System program. The deal involves providing critical software enhancement services for Mission Planning Development for initial operational capability in 2015. The contract will run through Jun 30, 2015 and the work will be carried out in California.

Lockheed Martin's Aeronautics arm also received an $18.4 million order for the procurement and supply of electronic parts required to support the production, sustainment, operation and maintenance needs of the F-35 aircraft.


Coming back to the acquisition, the addition of Zeta Associates will broaden Lockheed's diverse portfolio and provide access to cutting-edge defense technologies that is vital for U.S. air and space-based intelligence missions.

Zeta Associates develops software technologies that enable effective gathering, processing, safeguarding and dissemination of critical intelligence data for classified national security missions.

Military intelligence serves as the backbone of U.S. defense infrastructure and will continue to find a place in Pentagon's defense budget. The Pentagon is likely to concentrate on ratcheting up its defense intelligence capabilities and has retained Lockheed Martin's key space systems programs in the proposed FY2015 budget. This stimulus is prompting Lockheed to expand its military space product coverage through constant technological innovation as well as acquisitions.

Lockheed Martin recently acquired Astrotech Space Operations ("ASO"), reflecting the company's efforts to increase market penetration. The acquisitions will consolidate Lockheed Martin's space operations and keep the company well-positioned to attract major defense deals in the future.

Currently, Lockheed Martin carries a Zacks Rank #2 (Buy). Other similar ranked defense players include The Boeing Company ( BA ), Embraer SA ( ERJ ) and General Dynamics Corp. ( GD ).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ERJ , BA , GD , LMT

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