Lockheed Fire Control Sys for AH-1Z - Analyst Blog

Largest defense contractor, Lockheed Martin Corporation ( LMT ) has received two contracts worth $30.6 million to provide a fire control system known as the Target Sight System ("TSS") for AH-1Z Cobra attack helicopter. The contract calls for Lockheed to provide spare units and parts as well as program support for the AH-1Z fleet.

Manufactured at facilities in Ocala and Orlando, Florida, TSS is a multi-sensor electro-optical/infrared fire control system ("AN/AAQ-30"). It integrates high-tech sensors to provide aviators with superior images through a highly stabilized sensor suite, specifically customized for the AH-1Z platform.

The suite includes a laser designator, color TV camera and a third-generation, mid-wave, forward-looking infrared sensor with advanced image processing. TSS has the potential to identify targets at maximum weapon range.

The Naval Surface Warfare Center had earlier awarded the TSS contract in March 2008 followed by follow-on production contracts in June 2010 and September 2011. In June 2009, the company supplied its first TSS. It recently began delivery of its follow-on production units. The company expects the production to continue through 2018.

The fielded solutions for fixed- and rotary-wing aircraft provided by the company include Modernized Target Acquisition Designation Sight/Pilot Night Vision Sensor for the U.S. Army; Sniper Advanced Targeting Pod for the U.S. Air Force; and the AN/AAQ-39 targeting system for the U.S. Air Force Special Operations Command. TSS is one of several high-performance stabilized targeting systems designed, manufactured, and supported by the company.

Based in Bethesda, Maryland, Lockheed Martin is a global security company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

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, its ongoing share repurchase program and the incremental dividend.

However, we currently remain on the sidelines with the U.S. economic fundamentals being kept on a tight leash as the Euro-crisis continues. This 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. The company mainly competes with Northrop Grumman Corporation ( NOC ) and Raytheon Company ( RTN ).

LOCKHEED MARTIN ( LMT ): Free Stock Analysis Report

NORTHROP GRUMMN ( NOC ): Free Stock Analysis Report

RAYTHEON CO ( RTN ): Free Stock Analysis Report

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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.

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

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