Lockheed Martin Corporation
) has received a contract worth $57 million from the U.S. Navy
for upgrading the AN/SLQ-32(V)2 system that is installed on all
U.S. aircraft carriers, cruisers, destroyers and other warships.
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Under this Block 2 Surface Electronic Warfare Improvement Program
(SEWIP), Lockheed will upgrade the fleet's electronic warfare
defenses against anti-ship missile threats. Besides establishing
a framework to easily install future upgrades, this modernization
process will ensure that the AN/SLQ-32 system continues to
overcome threats. Task will be performed at the company's
Syracuse, N.Y. facility.
Block 2 is the latest version of "blocks" that the Navy is
pursuing for its shipboard electronic warfare system. In Nov
2009, Lockheed had received a contract to produce a preliminary
design for SEWIP Block 2. Recently, the company completed
successful integration and test activities for two engineering
The original AN/SLQ-32 system was developed by
). It uses radar technology for early warning, identification and
tracking of enemy threats. The system is fully compliant with the
Navy's Product Line Architecture strategy and helps in rapid
introduction of new technology into the fleet. In Jan 2012,
Lockheed along with Raytheon decided to pursue the Navy's
competitive SEWIP Block 3 program, which will upgrade the
system's electronic attack electronic warfare capabilities.
Based in Bethesda, Md., Lockheed is a global security and
aerospace company that is principally engaged in the research,
design, development, manufacture, integration, and sustainment of
advanced technology systems, products, and services. The
company's customer base includes the U.S. government, foreign
governments, and other commercial buyers.
Going forward, the company sees earnings growth in 2013, offers
an incremental dividend payout and enjoys a stable order backlog.
Also, we expect shareholder return to continue to be shored up by
the company's focus on debt repayment and its ongoing share
However, these positives will be offset by apprehension regarding
defense cutbacks on high-cost platform programs and over-exposure
to the Department of Defense budget. The company presently
retains a short-term Zacks Rank #3 (Hold).
Other stocks worth considering are
Wesco Aircraft Holdings, Inc.
Alliant Techsystems Inc.
), both with a Zacks Rank #2 (Buy).