Lockheed Martin Corporation (LMT) received a two-year, $424 million contract modification from the Missile Defense Agency. The contract modification will continue work on the Command, Control, Battle Management, and Communications (C2BMC) program.
 
In this extended phase of the program, work will be focused on increasing security, augmenting planner/situational awareness capabilities, handling new and more sensors and weapons systems, and providing more integrated functionality.
 
The C2BMC program is the “integrating element” for the Ballistic Missile Defense System and integrates the various sensors and weapon systems. The system is the force multiplier providing capabilities to integrate and globally synchronize missile defense systems and operations, providing an optimized, layered defense against various threats and in all phases of flight.
 
Lockheed Martin was originally awarded C2BMC contract in 2002 and majority of the work is conducted in Arlington, Virginia, Huntsville, Alabama, and Colorado Springs, Colorado.
 
Lockheed Martin remains a key player within the military space and continues to benefit from strong defense spending. The company’s customer base includes the U.S. Government, foreign governments and other commercial buyers. Lockheed’s traditional defense focus appears strong, with increasing interest from domestic and international customers.
 
In addition, management intends to explore strong business opportunities beyond the traditional defense market, specifically in the areas of civil, governmental and commercial space businesses. The company mainly competes with Boeing Company (BA), General Dynamics Corporation (GD), and Northrop Grumman Corporation (NOC).
 
Going forward, we believe Lockheed Martin has significant upside potential based on strong defense outlays throughout 2010–11, above-industry average return-on-invested-capital and expanding product lines.
 
However, these are offset by risks related to key projects execution, fate of high cost platform programs, lower top-line results in the Aeronautics segment, higher pension liability and a lower number of government satellite programs. We maintain our market Neutral recommendation on the Zacks #3 Rank (‘hold’) stock.
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