Pentagon’s prime contractor Lockheed Martin Corp. LMT has received a contract worth $485 million from the U.S. Air Force. Per the contract, Lockheed’s Missiles and Fire Control segment will supply the Sniper advanced targeting pods to the Air Force, along with initial spares and two-way data links. The contract also includes foreign military sales.
Contract work will be done in Orlando, FL and is expected to be over by Mar 26, 2018. Contracting activity is Air Force Life Cycle Management Center, Robins Air Force Base, GA.
Sniper is a targeting system that is extensively used by the U.S. Air Force for long-range target detection and surveillance.
On a global scale, the demand for weapons is going through a gradual transition. Instead of guns and ammunition, we now see rising demand for sensors, missiles and next-generation intelligence, surveillance and reconnaissance (“ISR”) technologies. With rising security threats, the U.S. government has realized an imminent need for ISR technologies and has shifted its emphasis to high-tech intelligence equipment. The FY16 defense budget proposed by the Obama administration has put due emphasis on ISR and missile defense.
In light of the changing needs of the defense landscape, more demand is likely to emerge from the ISR zone; and defense companies agile enough to recognize this opportunity and adapt to the same will gain, going forward.
Lockheed has been trying to diversify and strengthen its non-platform-centric operations. The recent acquisitions stand proof to the company’s eagerness of taking advantage of the demand transition. In 2014, it completed the acquisition of Astrotech Space Operations, which was integrated into the Space Systems segment. The company also added Zeta Associates to its portfolio, which will provide access to cutting-edge defense technologies that are vital for U.S. air-and space-based intelligence missions. All these initiatives will likely consolidate Lockheed’s position and boost its top line, going forward.
Lockheed has a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector are Huntington Ingalls Industries, Inc. HII, Northrop Grumman Corporation NOC and Rockwell Collins Inc. COL. While Huntington Ingalls sports a Zacks Rank #1 (Strong Buy), Northrop and Rockwell Collins have a Zacks Rank #2 (Buy).
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