Lockheed Wins Bid Against CH2M Hill - Analyst Blog

By Zacks Equity Research,

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Lockheed Martin Corporation ( LMT ) has won a bid against CH2M Hill and has received a multi-year contract worth $2 billion to support the National Science Foundation's ("NSF") Antarctica operations. The company will provide support infrastructure to the U.S. Antarctic Program that conducts research at the South Pole.

The company had initially received the contract in December 2011. Later, CH2M Hill filed a protest with the Government Accountability Office ("GAO") as it claimed to have provided cold weather support to NSF in the Arctic earlier.

National Science Foundation manages the program and provides logistics and infrastructure for federal agencies to conduct their research there. Per the deal, the company will be responsible for modernization of technologies that will transport scientists, staff and supplies to and from the Antarctic region. It will render services like maintaining computer networks so that they operate well even in the challenging conditions, installing light bulbs and providing food stuff and supplies among other duties.

Besides technological innovations, the company will set up a cost-effective streamlined infrastructure that will supervise three work stations located in the South Pole, McMurdo and Palmer and medical facilities, research vessels, construction projects and remote sites in and around Antarctica.

On the whole, we expect the company to register a stable performance due to a leveraged presence in the Army, Air Force, Navy and IT programs. Also, shareholder return will continue to be shored up by the company's focus on debt repayment and its ongoing share repurchase program. Lockheed Martin posted strong results for the first quarter of 2012 with operating earnings of $2.02 per share beating the Zacks Consensus Estimate of $1.70. This was also higher than the year-ago quarterly earnings of $1.55 per share.

However, the impact of the Euro-crisis on U.S. economic fundamentals keeps the risk high for further cutbacks in defense budgets. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Lockheed Martin is the largest defense contractor in the world. The company's customer base includes the U.S. government, foreign governments, and other commercial buyers. The company mainly competes with The Boeing Company ( BA ).

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BA , LMT

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