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Lockheed in Contract Winning Spree

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Headquartered in Bethesda, MD, the prime defense contractor Lockheed Martin Corp. (LMT) was the clear winner in yesterday’s contract appropriations made by the Department of Defense (DoD). Lockheed won three contracts worth $606.2 million in total.

The largest of the three contracts, worth $452.0 million, was awarded to Lockheed Martin Space Systems Co. Per the contract, the company will provide reentry system/reentry vehicles (RS/RV) subsystem support as well as procure MMIII RS/RV subsystem and related support equipment.

Lockheed will provide sustaining and maintenance engineering, aging surveillance, modification of systems and equipment, software maintenance, developmental and production engineering. Work is expected to be complete by Jun 4, 2022.

The second contract, worth approximately $134.2 million, also went to Lockheed Martin Space Systems Co. This modification contract entitled Lockheed to provide highly specialized services to support Ballistic Missile Defense System flight test activities using the contractor’s developed target hardware. The Missile Defense Agency is the contracting activity and the task has a completion date of Dec 8, 2018.

The third contract, a minor one worth $20.0 million, calls for Lockheed to provide sustaining engineering services in support of the Consolidated Automated Support System family of testers. Work under this contract is expected to be completed in Jun 2019.

Although the threat of sequestration still lurks over this defense major, negatively impacting the company’s first quarter 2014 sales, Lockheed Martin continues to win both big and small contracts.

Recently, Lockheed outmatched its rival bidder Raytheon Company (RTN) to clinch a big ticket contract for building a radar system to track space junk. The contract, valued at a whopping $915 million, involves the creation of a radar system at the Marshall Islands located in northern Pacific Ocean.

The sequester that went into effect at the start of Mar 2013 will cut spending by a total of approximately $1.1 trillion over the eight-year period from 2013 through 2021. Yet, Lockheed Martin expects to perform well in 2014 thanks to technological innovations, big contracts and acquisitions. Lockheed Martin reaffirmed its top-line expectation for 2014 in the range of $44,000 million to $45,500 million.

Currently, the company carries a Zacks Rank #2 (Buy). Other well-placed defense operators include Zacks Ranked #1 (Strong Buy) Embraer S.A. (ERJ) and Zacks Ranked #2 (Buy) Leidos Holdings, Inc. (LDOS).

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