Lockheed Martin Wins $353M Deal To Support F-35 Program
Zacks Investment Research | Sep 23, 2019 10:45PM ET
Lockheed Martin Corp.’s (NYSE:LMT) business division, Aeronautics, recently clinched a modification contract for procuring Generation 3 helmet mounted displays from 12th-14th lots to support the F-35 Lightning II program. The deal has been awarded by the Naval Air Systems Command, Patuxent River, Maryland.
Valued at $352.7 million, the contract is expected to be completed by December 2020. The entire task will be carried out in Fort Worth, TX.
Importance of F-35 in the Fighter Jet Market
With increased cross-border tensions gripping varied nations across the globe, both developed and developing nations have been ramping up their defense arsenal over the past decade. Notably, military jets comprise major part of the weapon portfolio. Currently, Lockheed Martin’s supersonic, multi-role fighter jet, F-35, is being used by the defense forces of the United States and 11 other nations.
According to Forecast International, a total of 3,401 fighter aircraft are expected to be produced from 2019 through 2028. Notably, the total number of fighters to be produced over the next decade is 17.2% higher than the number of aircraft produced during the previous 10 years. Due to its selection as the tactical fighter of choice for the U.S. Air Force, Navy, and Marine Corps, F-35 is anticipated to be the largest fighter program over the next decade.
Of the nearly 3,400 fighters expected to roll off the production lines during the next 10 years, 1,548 jets are projected to be F-35s, representing 45.5% percent of the market. This clearly highlights the importance of the F-35 program in the global fighter jet market.
What Favors Lockheed Martin?
The F-35 is Lockheed Martin’s largest program that generates more than 25% of its total sales. The program fueled annual revenue growth by 19.6% at the company’s Aeronautics division in 2018. Keeping up with this trend, we may expect the latest contract win to help the Aeronautics unit deliver similar or even better performance in the upcoming quarters.
Taking into account the F-35 program’s solid estimated production rate, as mentioned above, the latest contract win should further provide a boost to this program in the coming days.
Such developments reflect solid prospects for Lockheed Martin’s F-35 program, which are likely to boost the company’s profit margin.
Price Movement
In a year’s time, shares of Lockheed Martin have gained 12.9% compared with the Zacks Investment Research
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