Credit: Shutterstock photoDefense behemoth Lockheed Martin Corp. 's LMT Rotary Mission Systems business division secured a modification contract, to support the AEGIS weapon system (AWS). Work related to this deal is expected to be over by November 2018.
Details of the Deal
Valued at $60.2 million, the contract was awarded by the Naval Sea Systems Command, Washington, D.C. Per the terms of the agreement, Lockheed Martin will conduct ship integration and test of the AWS for AWS baselines through Advanced Capability Build 12.
Majority of the work will be executed in Camden, NJ; Norfolk, VA; Pascagoula, MS; and Moorestown, NJ. Fiscal 2012 and 2013 shipbuilding and conversion; fiscal 2017 and 2018 other procurement; and fiscal 2018 operations and maintenance funds will be used to partly finance the deal.
A Brief-Note on AWS
Lockheed Martin's AWS is the world's premier naval air defense system and the sea-based element of the United States' Ballistic Missile Defense System. It is a seamlessly integrated radar and missile system, which has the capability to provide protection against advanced air, surface and subsurface threats.
A key component of the AWS is the SPY-1 multi-function phased array radar - the world's most advanced and versatile maritime radar.
Our View
Lockheed Martin's Rotary and Mission Systems (RMS) business carries out some of the company's high-profile programs, including the Aegis Combat System, Littoral Combat Ship, MH-60 helicopter avionics along with military and commercial orders.
At present, Lockheed Martin's Aegis system is a sought-after maritime weapon system for nations like Australia, Japan, Norway and Spain. In the third quarter the RMS unit's revenues witnessed a year-over-year improvement. Going ahead, the latest contract for the AWS is expected to provide further impetus to this unit's growth.
Additionally, the recently passed fiscal 2018 defense policy, authorizing the United States' defense spending worth $700 billion, has enhanced the prospect of increased order flow from Pentagon for major defense contractors like Lockheed Martin, Raytheon Company RTN , Northrop Grumman Corporation NOC , The Boeing Company BA and others.
Price Performance
Shares of Lockheed Martin have rallied 17.7% over a year underperforming the industry 's 31% gain. This could be because the earlier budget cuts might have put pressure on the top line.
Zacks Rank
Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
