A Lockheed Martin Corp. (LMT) unit recently won a foreign military sales modification contract worth $595 million from the U.S. Army.
The contract won by Lockheed Martin Missile and Fire Control (MFC) is aimed at procuring PATRIOT Advanced Capability (PAC-3) production items, comprising 152 PAC-3 cost reduction initiative missiles, 15 PAC-3 launcher modification kits, the associated ground equipment, tolling and initial spares.
The deal includes foreign military sales to prominent customers like Qatar, Taiwan, Kuwait and the United Arab Emirates (UAE). The contracting activity is the Army Contracting Command, Redstone Arsenal (Missile), Alabama. The tentative date of the completion of the order is May 31, 2016.
The PAC-3 missile is a highly advanced air defense missile capable of defending against even the most advanced cruise missiles. Lockheed Martin is a major contractor on the PAC-3 missile segment of the Patriot air defense system. It boasts a diverse customer base including the U.S. Army and other international players like Japan, Taiwan, Germany, the Netherlands, Kuwait, Qatar and the UAE.
Lockheed Martin has been able to expand its customer base even in the face of a harsh budget environment primarily because of its continued product innovation efforts and diversified operations. It has managed to clinch one lofty deal after another.
In Jul 2014, Lockheed Martin received a $212 million contract from the U.S. Army Aviation and Missile Command for providing maintenance and surveillance services for PAC-3. Back in Apr 2014, the company received a whopping $611 million production order for PAC-3 MSE missiles and Launcher Modifications Kits.
We believe that with a stable funding level for the Missile segment in the proposed fiscal 2015 U.S. defense budget, Lockheed Martin will continue to win big deals and its broad range of missile products will lend consistency to its future profitability.
Lockheed Martin currently holds a Zacks Rank#3 (Hold). Better-ranked stocks in the sector include Air Industries (AIRI), Boeing (BA) and General Dynamics (GD). While Air Industries holds a Zacks Rank #1 (Strong Buy), Boeing and General Dynamics both carry a Zacks Rank #2 (Buy)
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