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Defense Stock Roundup: Contract Wins in Focus, LMT, GD and Others Score Big

Zacks Equity Research

A generous flow of contracts from the Pentagon kept the major defense contractors buoyant in the past week. The major indices of the Aerospace-Defense space ended in the green over the trailing five trading sessions. The S&P 500 Aerospace & Defense (Industry) index inched up 1.1%, while the Dow Jones U.S. Aerospace & Defense index rose 5% in the aforementioned time period.

Among past week’s highlights, defense majors namely Lockheed Martin Corp. LMT, General Dynamics Corp. GD, Raytheon Technologies, Inc. RTX and Huntington Ingalls Industries Inc. HII secured a number of notable deals from the Department of Defense’s daily funding session. Moreover, a plausible $9 billion deal win authorized by the U.S. Senate Panel for Lockheed must have also boosted the Aerospace-Defense space.

Recap of Past Week’s Important Stories

1.    Lockheed clinched a $375.5 million modification contract to design and develop unique hardware and software for the Multi-Role Helicopter MH-60R development program. The deal will serve the government of India.

The contract is scheduled to be completed by June 2025 (read more: Lockheed Martin Wins $376M Deal to Support MH-60R Aircraft).

Reuters announced that the U.S. Senate Armed Services Committee has authorized $9.1 billion to procure 95 of Lockheed’s F-35 aircraft, as part of the 2021 National Defense Authorization Act (NDAA). If passed into law, the legislation will enable Pentagon to make one or multiple deals worth $9.1 billion for the F-35 program (read more: Lockheed May Win $9.1B F-35 Deal Courtesy of Senate Panel).

2. General Dynamics’ Mission Systems unit secured a $104.2-million contract for the development, production and installation of Columbia (US01) and Dreadnought-class ballistic missile submarine. The contract was awarded by the Strategic Systems Programs, Washington, D.C.

The entire task related to the deal is scheduled to be completed by November 2024 (read more: General Dynamics' Unit Wins $104M Submarine Manufacturing Deal).

The company’s Land Systems unit won a $2.48-billion contract for the production of Stryker Double V-Hull A1 engineering vehicles along with an engineering change proposal configuration. Work related to the deal is expected to get completed by Apr 30, 2027 (read more: General Dynamics Wins $2.5B Stryker Vehicles Production Deal).

3. Raytheon Technologies clinched a $202.6-million contract for supporting Boeing’s (BA) F-15 aircraft. Per the deal terms, Raytheon Technologies will provide support for APG 82(V)1 radar modernization program depot activation to aid the U.S. Air Force, including engineering services for depot activation.

The contract is expected to conclude by Dec 11, 2024 (read more: Raytheon Technologies Wins $203M Deal to Support F-15 Aircraft).

4. Huntington Ingalls’ Ingalls Shipbuilding unit won a third modification contract, worth $145.6 million, to provide long-lead-time material and advance procurement activities for amphibious assault ship LHA 9 class. The modification now brings the total advance funding for LHA 9 to $350 million.

Per the deal terms, Huntington Ingalls will procure long-lead-time material for LHA 9, the fourth LHA(R) America Class amphibious assault warships and the second LHA(R) Flight 1 variant. The entire task related to the deal is scheduled to be completedby February 2024 (read more: Huntington Ingalls Wins $146M Deal to Support Assault Ships).

Performance

Over the past five trading sessions, the defense biggies put up a mixed show. While Boeing and Textron TXT gained, Lockheed Martin and L3Harris lost.

In the last six months, the industry's performance was disappointing. Boeing lost the most with 41.1% slump in share price, followed by Raytheon Technologies.

The following table shows the price movement of the major defense players over the past five trading days and during the last six months.

Company Past Week Last 6 Months
LMT -1.67% -2.20%
BA 13.11% -41.12%
GD 7.08% -12.17%
RTX 6.41% -28.47%
NOC -0.98% -8.10%
TXT 10.69% -21.19%
LHX -4.20% -5,44%


 

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