Lockheed Martin Wins Twin Defense Contracts Worth $498M - Analyst Blog
Pentagon’s prime contractor, Lockheed Martin Corp. LMT won two contacts from the U.S. Department of Defense (DoD) on Wednesday, Jun 24, 2015.
The larger of the two contracts is worth $480 million. Per this indefinite delivery/indefinite quantity (“IDIQ”) contract, Lockheed Martin will continue to assess and enhance the capabilities of the U.S. Air Force’s C-130J aircraft. The company will work on upgrading the aircraft in each of its areas of development. The contractor will carry out its research and development work at Marietta, GA. The work is expected to complete by Jun 19, 2030. The company received the contract from Air Force Life Cycle Management Center, which is located at Wright Patterson Air Force Base, OH.
The second award – worth approximately $18 million – is a contract modification from the U.S. Army for non-recurring engineering tools, test equipments and labor required to increase the production of the Hellfire II missile. Per the modified contract, Lockheed Martin is now required to augment missile production from the present 500 all-up rounds (“AURs”) per month to 550 and 650 AURs per month. Work will be performed in Orlando, FL and is slated to complete on Nov 30, 2016. This contract was awarded to Lockheed Martin by Army Contracting Command, Redstone Arsenal, AL.
The company’s popular C-130 program is the most fielded cargo aircraft in the world. Since its inception, the aircraft has gone through a good many upgradations and improvements, C-130J being the latest model in this family.
Lockheed Martin is the largest defense contractor in the world. The company enjoys a steady flow of contracts both from the U.S. DoD and international customers. Recently, the Obama administration unveiled a new export policy for drones following requests made by allied nations. The shift in the export policy is likely to bring in increasing sales opportunities for Lockheed Martin’s unmanned systems as well as for its Hellfire missiles. These missiles are extensively used by the popular Predator and Reaper drones.
Lockheed Martin currently carries a Zacks Rank #2 (Buy). A better-ranked stock in the aerospace sector is TransDigm Group Incorporated TDG, sporting a Zacks Rank #1 (Strong Buy). Equally well-placed stocks in the same space are Leidos Holdings, Inc. LDOS and Northrop Grumman Corporation NOC, carrying a Zacks Rank #2.
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