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Lockheed (LMT) Wins $53M F-35 Aircraft Program Support Deal

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Lockheed Martin Corp.’s LMT business unit, Aeronautics, recently secured a modification contract, aimed at supporting the F-35 program. This modification aims at increasing the scope of procuring various material and software, required for the 30P06 capability upgrade to all fielded pilot and maintenance training systems involving the F-35 program.

Valued at $53.2 million, the contract has been awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of the task will be conducted in Orlando, FL. The entire task is scheduled to be completed by May 2023.

Rise in Demand Aids F-35 Program

The rise in global terrorism and adverse geopolitical situations has increased the need for enhancing the nation's defense budget, a major portion of which is allocated to combat aircraft. The F-35 program is supported by an international team of leading aerospace majors, such as Northrop Grumman NOC, BAE Systems BAESY and Pratt & Whitney, a unit of Raytheon Technologies RTX. Notably, Northrop Grumman rendered its expertise in carrier aircraft and low-observable stealth technology to this program. Also, BAE Systems’ short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Pratt & Whitney offered its combat-proven engine to this jet.

Such features have enabled the F-35 jet to dominate the combat aircraft market, buoyed by solid demand as is evident from the frequent contract wins involving F-35 program and its associated upgrades, both from Pentagon and other U.S. allies. The latest contract win is a bright example of that.

Growth Prospects

As of Mar 28, 2021, Lockheed Martin delivered 628 F-35 airplanes since the program's inception with 339 jets still in backlog. This surely boosts sales expectation for the Aeronautics business segment in the coming days.

Moreover, the production of F-35 jets is expected to continue for many years, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy. Consequently, we expect Lockheed Martin to witness more order inflows for F-35 and its associated upgrades, like the latest one, which in turn should bolster this defense contractor’s top line.

Price Movement and Zacks Rank

Shares of this Zacks Rank #3 (Hold) company have lost 5.7% in the past year against the industry’s growth of 9.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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