Lockheed, L-3, UTX Win DoD Contracts

Zacks

L-3 Communications Holdings Inc. (LLL), Lockheed Martin Corp. (LMT) and United Technologies Corp. (UTX) received contracts worth a cumulative $2.4 billion from the Department of Defense (DoD).

L-3 Communications clinched a firm-fixed-price modification contract worth $6.7 million to produce, test, deliver, and support five Common Data Link Hawklink AN/SRQ-4 radio terminal sets. These sets will be utilized by four Navy and one Coast Guard MH-60R Seahawk helicopters. The company expects the task to be completed by May 2015.

Lockheed Martin was the beneficiary of a $9 million contract. Per the contract, the company will provide services for the PATRIOT Advanced Capability-3 air defense missile system.

Pratt & Whitney, a unit of United Technologies, has received a fixed-price, indefinite-delivery, requirements type contract with an estimated value of $11.4 million. The contract calls for travel and relocation of 15 contractor engineering and technical services representatives. The task will be performed on five Air National Guard, one Navy, and nine foreign military F100, JT9D, and J52 jet engines and is expected to be completed by Jun 25, 2016.

Publicly traded companies were not the only recipients of DoD contracts. General Atomics, a privately held firm also received a $28.3 million contract to manage the structural integrity of the MQ-9 Reaper drone fleet throughout the aircraft's life cycle. The task is expected to be completed by Sep 25, 2016.

As widely apprehended, defense companies would be severely affected by the sequestration. Per a media report, budget cuts from sequestration have reduced the number of contracts awarded by DoD in April this year.

However, the latest flurry of DoD contracts would to some extent offset the adverse situation A few days back, Data Link Solutions, Alliant Techsystems Inc. (ATK), FLIR Systems Inc. and Lockheed Martin received DoD contracts. In total, 22 contracts were issued with a cumulative value of less than $500 million.

Large defense pros like L-3 Communications and Lockheed have diversified business models, expertise and specialization in various defense programs which will help counter the prevailing macro headwinds.

L-3 Communications, Lockheed Martin and United Technologies, all carry a short-term Zacks Rank #3 (Hold).

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