L-3 Communications Holdings Inc.’s (LLL) Link Simulation & Training division has won a $20.9 million contract option for the F-16 Mission Training Center (MTC) program. This contract option, received from the Aeronautical Systems Center’s Training Systems Product Group at Wright Patterson Air Force Base, brings the total contract value for the program to $109.1 million. 

Under the contract option, L-3 Link will build and deliver an F-16 MTC suite that includes four high-definition simulators. Boeing Co. (BA) will provide the instructor/operator stations and brief/debrief systems.
L-3 Communications’ Link Simulation & Training division delivers and supports training systems and equipment to enhance operational proficiency. The company’s current services include conducting front-end analysis, program design, simulator design and production, field support, aircraft logistics support, training and courseware support, and air traffic control training.
Headquartered in New York, L-3 Communications is a leading provider of Intelligence, Surveillance and Reconnaissance systems and products; secure communications systems; aircraft modernization, training and government services; and is a merchant supplier of a broad array of high technology products. 

L-3 Communications remains a key player within the defense segment and mainly competes with FLIR Systems Inc. (FLIR), Herley Industries Inc. (HRLY), and Raytheon Co. (RTN). We believe it is one of the best-positioned pure defense plays by virtue of its non-platform focus, and broad diversification of programs. 

Our bullish outlook for L-3 Communications is supported by its strong performance stemming from the command, control, communications, intelligence, surveillance and reconnaissance equipment, precision-guided weapons, unmanned aerial vehicles, and other electro-mechanical robotic capabilities, networked information technologies, special operations forces, and missile defense. 

However, these are partially offset by risks related to key projects execution, divestitures, higher pension funding, and declining Linguist and commercial businesses revenues. We maintain our market Neutral recommendation on the stock.
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