U.S. defense's foremost contractor
Lockheed Martin Corp.
) won three back-to-back contracts from the Pentagon on Friday.
The contracts are worth $241.9 million collectively compared to
the defense department's $675.9 million funding.
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The largest of these contracts, with a total ceiling value of
$124.5 million, entails the development and production of the
acoustic rapid commercial-off-the-shelf insertion (A-RCI) and
common acoustics processing for Technology Insertion 12 (TI12)
through Technology Insertion 14 (TI14) for the U.S. submarine
A-RCI is a sonar system that integrates and enhances data
processing from towed array, hull array, sphere array, and other
ship sonar sensors. This latest modification contract runs
through Dec 2014.
The second contract, valued at $92.9 million, is a modification
order to help out with logistics on Apache attack helicopters
undergoing target designation sight/pilot's night vision sensor
equipment upgrades. Through this contact, Lockheed Martin
actually exercises its second-year option of the contract and
work is expected to be completed by Dec 31, 2014.
The third contract, with a value of $24.5 million, is a
fixed-price incentive, firm-fixed-price, and cost-plus-fixed-fee
contract for the production and support of AN/BQS-25 low-cost
conformal arrays (LCCA). These LCCAs are passive planar arrays
mounted on the aft submarine sails of submarines. This contract,
which is slated to be completed by Mar 2015, includes options
which, if exercised, would extend its duration and increase the
total value to almost $92.5 million.
Despite budget austerities, this defense behemoth has managed to
win Pentagon contracts regularly. The company has won $15 billion
in orders during the third quarter. Going forward, the diverse
product offerings, strong program execution and cost reduction
measures will help the company to sustain its profitability.
Given the lower government spending on defense, we expect
Lockheed Martin to trade in line with the broader market indices.
Lockheed Martin currently carries a Zacks Rank #3 (Hold). Other
defense stocks also worth considering include
The Boeing Co.
Huntington Ingalls Industries, Inc.
). While Raytheon sports a Zacks Rank #1 (Strong Buy), Boeing and
Huntington Ingalls carry a Zacks Rank #2 (Buy).