Defense major Lockheed Martin Corp. (LMT) has received a contract from the U.S. Department of Defense (DoD) to provide 19 additional AN/TPQ (Q-53) radar systems, a long-range counter fire radar that provides soldiers with enhanced 360-degree protection from indirect fire. The contract is worth $206 million. The work on the contract will be performed at Lockheed Martin facilities in Syracuse, N.Y., Moorestown, N.J., Akron, Ohio, and Clearwater, Fla.
Lockheed Martin originally won this contract for Q-53 systems, formerly known as EQ-36, in 2007. In Jul 2008, the U.S. Army awarded the company 12 initial production systems and in April 2010 a contract with options for an additional 20 systems. In 2010, these Q-53 Lockheed Martin radar systems were used by the Iraqi and Afghanistan militaries. The systems can easily be mounted on a truck and have automated leveling and remote-operation capabilities.
The defense behemoth has delivered 32 initial production systems to the U.S. Army to date. Presently, it is producing 33 more systems, which were awarded in Mar 2012.
In mid 2013, the company won a firm-fixed-price contract extension worth $206.8 million from the DoD. Per the contract, Lockheed Martin will supply additional Q-53 radar systems and their corresponding spare parts.
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of follow-on orders. We expect Lockheed Martin to register a stable performance in the long run due to a leveraged presence in the Army, Air Force, Navy and IT programs.
Although the aerospace and defense industry is faced with budget uncertainty and sequestration, these defense behemoths have diversified their businesses to counter the effect and are not lacking in DoD contracts. Recently, Lockheed Martin received an undefinitized modification contract worth $34.5 million from the DoD. Per the contract, the company will provide Autonomic Logistics Information System equipment, training devices, and sustainment and logistics work. Again, it received a contract worth $852.3 million from the DoD to provide the required equipment for F-35 fighter jets under Low Rate Initial Production Lot 6.
The company presently retains a short-term Zacks Rank #2 (Buy). Other favorable names in the space include Alliant Techsystems Inc. (ATK), Northrop Grumman Corp. (NOC) and Huntington Ingalls Industries, Inc. (HII). While Alliant Techsystems carries a Zacks Rank #1 (Strong Buy), Northrop and Huntington Ingalls hold a Zacks Rank #2 (Buy).
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