The U.S. Army awarded a contract worth $309 million to defense contractor Lockheed Martin Corporation (LMT) for work on the Army and Marine Corps’ Javelin antitank missile program.
The contract has been received from the U.S. Aviation and Missile Command in Redstone Arsenal, Alabama under the fiscal 2009 Javelin hardware production requirement.
Lockheed Martin will perform the work in Tucson, Arizona and in Orlando, Florida with completion expected by October 30, 2012.
In a separate development, the company successfully launched the first Advanced Extremely High Frequency (AEHF) satellite built for the U.S. Air Force. This technologically advanced military communications satellite will provide significantly improved global, survivable, highly secure, protected communications for warfighters operating on ground, sea and air platforms.
The company thus continues to benefit from defense outlays and contract wins. Continued contract wins for the company will help it post solid revenue growth going forward. Revenue in the second quarter of 2010 increased 3.3% year over year to $11.4 billion.
During the second quarter conference call, management provided its revenue outlook for fiscal 2010 of $45.5 billion – $46.5 billion and its earnings outlook of $7.15 – $7.35 per share.
The Zacks Consensus Estimate for third-quarter 2010 is earnings of $1.88 per share. For full years 2010 and 2011, the Zacks Consensus Estimates are $7.40 per share and $7.72 per share, respectively.
A large percentage of Lockheed Martin’s businesses comes from the US government. Consequently, the company’s revenue would be substantially dented if the $100 billion proposed reduction of U.S. defense expenses is carried out over the next five years.
We maintain our “Neutral” recommendation on Lockheed Martin. The quantitative Zacks #3 Rank (‘Hold’) for the company indicates no clear directional pressure on the shares over the near term.
Based in Bethesda, Maryland, Lockheed Martin Corporation is a diversified defense company that primarily researches, designs, develops, manufactures, integrates, operates, and sustains technology systems and products, apart from providing a range of management, engineering, technical, scientific, logistic and information services.
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