Lockheed Martin's Sikorsky Wins Contract For UH-60M Aircraft
Zacks Investment Research | Jan 14, 2018 11:45PM ET
Lockheed Martin Corp.’s (NYSE:LMT) business unit, Sikorsky Aircraft, recently secured a contract for manufacturing eight UH-60M aircraft for Saudi Arabian National Guard Forces and nine similar aircraft for the Royal
Saudi Land Forces Airborne Special Security Forces.
Details of the Deal
Valued at $1.94 billion, this foreign military sales (FMS) contract to Saudi Arabia was awarded by the Army Contracting Command, Redstone Arsenal, AL.
The contract will utilize fiscal 2018 foreign military sales to fund the work, which is likely to be executed in Stratford, CT. Work related to the deal is scheduled to be completed by Dec 31, 2022.
A Brief Note on UH-60M Aircraft
The UH-60M Blackhawk helicopters are an upgraded version of combat-proven UH-60 helicopter. The Multi-mission UH-60M is the latest in the Black Hawk helicopter family and is more capable, survivable, maintainable, powerful and effective than its predecessors. The UH-60M provides additional payload and range, advanced digital avionics, better handling qualities and situational awareness, active vibration control, improved survivability and improved performance using high-speed machined parts.
The centerpiece of the UH-60M Black hawk helicopter is an advanced digital avionics suite that provides improved situational awareness and interoperability with the Future Combat System. It is more effective with its integrated digital cockpit, moving map display, enhanced GPS/INS system and fully coupled flight controls.
Our View
Lockheed Martin had acquired Sikorsky Aircraft from United Technologies Corp (NYSE:UTX). in November 2015 that boosted the former’s position as the world’s largest defense contractor, strengthening its military helicopter business. The acquisition added Sikorsky’s world-known aircraft, Black Hawk, along with different variants of combat and commercial choppers to Lockheed Martin's helicopter product line.
In the third quarter of 2017, the Sikorsky business saw a drop in net sales margin. However, for 2017, the company has increased its sales outlook, on expectations of contributions from its Rotary and Mission Systems (RMS) unit, which includes the Sikorsky unit. We believe generous fund flows from Pentagon, in the form of contracts like the latest one, will allow Lockheed Martin to make a rebound in the RMS business unit.
Price Movement
Lockheed Martin’s stock has moved up about 32.1% in a year, compared with the broader Zacks Investment Research
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