Lockheed Martin Corporation (LMT) has received a production contract of $789.8 million for the Terminal High Altitude Area Defense (THAAD) Weapon System of the U.S. Missile Defense Agency. Although originally a U.S. Army program, THAAD had come under the umbrella of the Missile Defense Agency. The U.S. Navy also uses a similar program, the sea-based Aegis Ballistic Missile Defense System developed by Lockheed.
Lockheed delivered the first two U.S. Army Batteries in late 2006. Since its inception the THAAD development program has completed 11 test flights, with seven intercepts in seven attempts. THAAD is the only missile defense system with the operational flexibility to intercept both inside (endoatmospheric) and outside (exoatmospheric) the earth’s atmosphere.
Lockheed’s new follow-on contract includes $694.9 million for the production of 48 THAAD interceptors, six THAAD launchers, four fire control units and additional support equipment. An option for additional launchers in the amount of $94.8 million is also included in the contract. The cumulative value including the option comes to a total of $789.8 million. Lockheed expects to finish delivery of the contract by 2013.
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of orders with a leveraged presence in the Army, Air Force, Navy and IT programs. Also, the company’s focus on debt repayment, an ongoing share repurchase program along with an increasing dividend will continue to shore up shareholder return.
However, we believe that budget deficits and political uncertainty make future defense budgets vulnerable to cutbacks. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term ‘Neutral’ recommendation on the stock.
Based in Bethesda, Maryland, Lockheed Martin is a global security company that designs and produces ballistic missiles, interceptors, target missiles and reentry systems with unmatched reliability. Lockheed Martin’s focus on operational excellence helps produce affordable high-quality systems and services. It leads the industry in performance and domain expertise in strategic missile and missile defense systems. The company mainly competes with Northrop Grumman Corporation (NOC) and The Boeing Company (BA).
BOEING CO (BA): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
Zacks Investment Research
