Lockheed Martin Corporation (LMT) received three contracts from the U.S. Air Force relating to logistics and research, the combined value of which is $113 million.
Lockheed’s Space System division won two contracts. The first one is a $90.5 million contract modification to sustain logistics support and legacy work and the second one, worth $16 million, is for continuation of research to further improve the Advanced Extremely High Frequency Satellite.
Lockheed’s missiles and fire control (M&FC) unit received the third contract worth $6.8 million. The company will provide support to the common organizational level tester unit and common accessory kit at Wright Patterson Air Force Base in Ohio.
Net sales from Space Systems increased 1.1% year over year at the end of second-quarter 2010. Lockheed raised its operating income guidance for 2010 by $30 million, taking into consideration improved performance from Space Systems. We believe the contract wins will allow the company to achieve its updated operating income guidance.
In second-quarter 2010, solid performance at M&FC helped drive Lockheed’s Electric System results. The growth at M&FC primarily issued from higher volumes on air defense and certain tactical missile programs.
Profitability at Lockheed is largely contingent on defense spending and the contracts it receives from various defense departments. Lockheed recently won a couple of defense contracts, which comprise $309 million for work on the U.S. Army and Marine Corps’ Javelin antitank missile program and $16.6 million from the U.S Army.
We presently have a Zacks #3 Rank (short-term ‘Hold’ recommendation) on shares. We also maintain our “Neutral” recommendation on Lockheed Martin.
Based in Bethesda, Maryland, Lockheed Martin operates globally in the fields of research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products. The major peers of the company are Boeing Company (BA), Northrop Grumman Corporation (NOC) and Raytheon Co. (RTN).
