The Zacks Analyst Blog Highlights: Orange, Lockheed Martin, Raytheon, Northrop Grumman and Boeing

Zacks

For Immediate Release
 
Chicago, IL – October 08, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Orange S.A., (ORAN-Free Report), Lockheed Martin Corp. (LMT-Free Report), Raytheon Company (RTN-Free Report), Northrop Grumman Corp. (NOC-Free Report) and The Boeing Company (BA-Free Report).
 
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Here are highlights from Monday’s Analyst Blog:

Orange, Samsung Tie Up

Orange Business Services, the enterprise business unit of Orange S.A., (ORAN-Free Report), recently announced its partnership with Samsung to jointly drive tablet penetration into the enterprise market. Financial details of the deal were not provided.

As per the deal, Samsung will provide integrated software solutions in its tablets which will specifically cater to corporate customers of Orange Business Services.  Orange will also gain from enterprise class security, customer support and device management solution provided by Samsung.
                                                                                    
Initially, both the companies will cater to the European network of Orange, with increased focus on France, Belgium, Spain and Poland. With the new partnership, Orange is targeting customers who look for a bundled service package that incorporates equipment, services and connectivity to enhance productivity. 
                                                                                          
Orangeis now in the second phase of its five-year action plan called Conquests 2014–2015, which aims at renewed growth at the Enterprise segment with solid improvements in Europe as well as in Africa and the Middle East.

The Enterprise segment is expected to register revenue growth of over 30% year over year in 2013 on steady revenue growth from the cloud computing business in the emerging markets. To boost its cloud services, the company launched the Orange Video Meeting mobile application that can be accessed through tablets or smartphones.

Shutdown Triggers Layoffs at Lockheed
 
After the partial U.S. government shutdown announcement on Oct 1, 2013, Lockheed Martin Corp. (LMT-Free Report) announced the layoff of 3,000 employees beginning on Oct 7, 2013. Consequently, the share price of the leading defense prime dropped 3.9% from Oct 1 to end at $122.50 at the close of session on Oct 4, 2013.

On Oct 1, 2013, the U.S. government began a partial shutdown after the two houses of Congress, the House of Representatives and the Senate, failed to reach a consensus on a new budget and pass a budget before the start of the financial year. As a result, more than 700,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over. It is the first shutdown in 17 years.

The premier defense contractor working on the staggering $392 billion F-35 fighter jet program indicated that it would continue to lay off more employees if the shutdown continues. However, it did not specify numbers. The layoff has been triggered by the closure of government facilities where work is usually performed on awarded contracts. Moreover, the defense government business is subject to inspection which cannot be executed now as the federal employees are on unpaid leave.

Other big defense players suffering the brunt of the shutdown include Raytheon Company (RTN-Free Report) with share prices down 4.6%, United Technologies Corp. (UTX) and Northrop Grumman Corp. (NOC-Free Report), both witnessing a 2.9% decline since Oct 1, 2013. Also, The Boeing Company (BA-Free Report) indicated that it could face some disruptions with respect to delivery schedule as some of its aircraft require approval of furloughed Federal Aviation Administration inspectors before they can be delivered to customers.

The layoff by Lockheed Martin was followed by United Technologies’ announcement to lay off 2,000 employees by Monday and more than 5,000 if the shutdown continues into the next month.

As a silver lining to the current impasse, the U.S. Defense Department has announced to call back most of its civilian employees it furloughed last week under the federal government shutdown. As a result, United Technologies canceled furloughs for 2,000 employees. We believe Lockheed would also likely call back the current layoffs and not make further layoffs.
 
Driven by multiple strengths like growth in earnings per share and notable return on equity, Lockheed Martin presently has a short-term Zacks Rank #2 (Buy). Other stocks worth considering in the space are Northrop Grumman and Raytheon, also with a Zacks Rank #2 (Buy).

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