Yahoo Finance Lockheed (LMT) Unit Wins $473M Deal to Support F-35 Program
Lockheed Martin Corp.’s LMT business segment, Aeronautics, recently secured a modification contract involving the F-35 jet program. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $472.5 million, the contract is expected to be completed by March 2026. Per the terms of the agreement, the company will conduct further development and integration of three unique weapons capabilities through system functional review, for development test completion on the F-35A and F-35B.
Majority of the task will be executed in Fort Worth, TX and Stevenage, United Kingdom. The contract will serve the governments of the United Kingdom and Italy.
Rise in Demand Aids F-35 Program
The rise in global terrorism and adverse geopolitical situations have increased the need for enhancing the nation's defense budget, a major portion of which is allocated to combat aircraft. The F-35 program is supported by an international team of leading aerospace majors, such as Northrop Grumman NOC, BAE Systems BAESY and Pratt & Whitney, a unit of Raytheon Technologies RTX. Notably, Northrop Grumman rendered its expertise in carrier aircraft and low-observable stealth technology to this program. Also, BAE Systems’ short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities. Pratt & Whitney offered its combat-proven engine to this jet.
Such features have enabled the F-35 jet to dominate the combat aircraft market, buoyed by solid demand as is evident from the frequent contract wins involving F-35 program and its associated upgrades, both from Pentagon and other U.S. allies. The latest contract win is a bright example of that.
Growth Prospects
As of Mar 28, 2021, Lockheed Martin delivered 628 F-35 airplanes with 339 jets still in backlog. This surely boosts sales expectation for the Aeronautics business segment in the coming days.
Moreover, the production of F-35 jets is expected to continue for many years, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy. Consequently, we expect Lockheed Martin to witness more order inflows for F-35 and its associated upgrades, like the latest one, which, in turn, should bolster this defense contractor’s top line.
Price Movement and Zacks Rank
Shares of this Zacks Rank #3 (Hold) company have gained 2.9% in the past year compared with the industry’s growth of 15%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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