Defense Stock Roundup: Lockheed Martin, Boeing, Raytheon Score Big Wins
A generous flow of funds from the Pentagon should have driven defense stocks over the trailing five trading sessions. However, disappointing performance by Apple due to slowdown in iPhone sales and a weak report on U.S. manufacturing data dealt a blow to Wall Street. This marred the positive impact of the flamboyant contract wins that the defense majors witnessed last week.
Consequently, major indices of the aerospace and defense industry ended in the green, but moved up slightly. Notably, the S&P 500 Aerospace & Defense (Industry) and the Dow Jones U.S. Aerospace & Defense indices inched up 1.7% in the past five trading sessions.
Among the last week’s highlights, defense majors namely Lockheed Martin Corp. LMT, The Boeing Company BA, Huntington Ingalls Industries, Inc. HII and Raytheon Company RTN secured a number of notable deals from the Department of Defense’s daily funding session.
Recap of Past Week’s Important Stories
1. Lockheed Martin Corp’s Aeronautics unit secured a contract worth $713 millionfor developing advanced hardware to support the F-35 Lightning II Technology Refresh 3 (TR3) System.
Under the agreement, the company will design the TR3 System with full flightworthy certification, production readiness review and fleet release to support low-rate initial production of the 15th Lot of F-35 jets. Work related to the deal is scheduled to be over by March 2023 and will be carried out in Fort Worth, TX (read more: Lockheed Martin Wins $713M Deal for F-35’s Technology Upgrade).
Another business unit of the company, Rotary and Mission Systems, clinched a $109 million deal from the U.S. Navy for modification of a previously awarded firm-fixed-price, cost-plus-fixed-fee, cost-reimbursable contract.
The company will provide 41 electronic Consolidated Automated Support Systems (eCASS). Per the terms of the agreement, Lockheed Martin will provide for eCASS-related equipment, kits and test sets in support of various Aircraft Intermediate Maintenance Departments, Fleet Readiness Centers, Aircraft Carriers and L- Class Ships. Work related to this deal is scheduled to be completed by December 2021 (read more: Lockheed Martin’s Unit Wins $109M eCASS Deal From US Navy).
2. Boeing secured a $400-million contract to provide recurring and non-recurring engineering services to B-1 and B-52 aircraft. The contract was awarded by the Air Force Life Cycle Management, Tinker Air Force Base, Oklahoma City, OK.
Work related to the deal is expected to get completed by Dec 31, 2019 (read more: Boeing Wins $400M Deal to Support B-1 & B-52 Bomber Aircraft).
Meanwhile, Bell-Boeing, a joint venture (JV) between Boeing and Bell Helicopter — a unit of Textron (TXT), secured a $367 million modification contract pertaining to the CMV-22B and MV-22B variants of the V-22 family of tiltrotors. Work related to the deal is scheduled to be completed by October 2023.
Per the terms of the agreement, the JV will manufacture and deliver three CMV-22B jets to the U.S. Navy and two MV-22B jets to the Marine Corps (read more: Bell-Boeing Wins $367M Deal to Build CMV-22B & MV-22B Jets).
3. Raytheon’s Missile Systems (MS) business division recently won a $434.4-million modification contract for the procurement of 766 AIM-9X and 160 AIM-9X Block II+ missiles. The deal will serve the U.S. Navy, the U.S. Air Force, and the governments of Israel, Norway, Qatar, South Korea, U.A.E., Australia and Netherlands.
Per the deal, Raytheon will also procure 170 Block II Captive Air Training Missiles, 12 Special Air Training Missiles, eight Spare Advanced Optical Target Detectors, 35 Spare Captive Air Training Missile Guidance Units, 50 Guidance Unit Containers and one Spare Block II Propulsion Steering Section (read more: Raytheon Wins $434M Navy Deal for AIM-9X Missile Program).
The Missile Systems unit too won a $205 million contract to manufacture land-based Phalanx weapon system. Work related to the deal is scheduled to be completed by Dec 27, 2023. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL (read more: Raytheon Secures $205.2M Deal for Phalanx Weapon System).
4. Huntington Ingalls Industries’ business segment, Newport News, clinched a $229 million modification contract to purchase additional long lead time material for supporting the USS Enterprise (CVN 80). Work related to the deal is scheduled to be over by January 2023 (read more: Huntington Ingalls Wins $229M Deal to Support CVN 80 Program).
Performance
Over the past five trading sessions, defense biggies have put up a solid show. Northrop Grumman NOC gained the most, with its shares rising 2.8% in last 5 trading days.
The industry's performance over the last six months has been dismal. This time General Dynamics lost the most, with its share price plummeting 19%, followed by Lockheed Martin.
The following table shows the price movement of the major defense players over the past five trading days and during the last six months.
Company | Last Week | Last 6 Months |
LMT | 2.05% | -13.82% |
BA | 1.80% | -6.62% |
GD | 1.77% | -19.15% |
RTN | 0.19% | -7.87% |
NOC | 2,78% | -8.18% |
TXT | 0.13% | -0.67% |
LLL | 1.94% | -5.22% |
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