L3Harris (LHX) Wins Deal To Upgrade Greek F-16V Program

L3Harris Technologies, Inc. (NYSE:LHX) recently won a contract to upgrade the existing F-16 Hellenic Air Force F-16 Aircrew Training Devices to the F-16V configuration. The deal has been awarded by the Air Force Life Cycle Management Center, Wright Patterson Air Force Base, OH.

Valued at $28 million, the contract is projected to be completed by Dec 31, 2027. Work related to this deal will be executed in Arlington, TX. The agreement will serve the Greek government.

F-16 & L3Harris

Originally manufactured by General Dynamics (NYSE:GD) , F-16 became part of Lockheed Martin (NYSE:LMT) after it acquired General Dynamics’ aircraft manufacturing business.The combat-proven F-16 falcon is a multi-role fighter jet, which currently serves 28 nations. Notably, F-16V, the latest F-16 configuration, includes numerous enhancements designed to keep the F-16 at the forefront of international security. Its F-16V configuration provides relevant combat capabilities in a scalable and affordable package. The core of the F-16V configuration is an Active Electronically Scanned Array (AESA) radar, a modern commercial off-the-shelf (COTS)-based avionics subsystem.

L3Harris’ Link Simulation and Training division delivers F-16 Aircrew Training Device, which enables pilots to improve their air-to-air and air-to-ground combat skills by acquiring and identifying targets. In addition, pilots are able to practice takeoffs and landings, aerial in-flight refueling, low-level flight and emergency procedures.

Our View

Increasing geopolitical tensions around the world along with widespread terror activities have been forcing nations to expand their defense arsenals significantly. Military jets form a vital part of that arsenal. Thus, F-16 being a renowned combat aircraft, is witnessing solid demand across the globe. The combat-proven F-16 plays a vital role in safeguarding Greece’s national sovereignty and defending its airspace from unauthorized intrusions. Its upgraded version F-16V is the most advanced, most capable F-16 configuration available today.

Notably, Greece’s Hellenic Air Force (HAF) F-16V upgrades are expected to deliver a significant increase in capability for the HAF combat aircraft fleet at a fraction of the cost of procuring new aircraft, enabling the HAF to stay ahead of emerging threats. HAF F-16Vs will be the most advanced F-16s in Europe. To stay ahead of other European nations, Greece is rapidly taking initiatives to upgrade its existing F-16Vs. The latest contract win is an example of that.

Looking ahead, the U.S. fiscal 2020 defense budget allocated major war-fighting investments worth $57.7 billion for aircraft. With increasing demand for combat aircraft, the need for realistic training that is concurrent and affordable is also rising. Such amendments highlight the solid growth prospects of defense primes like L3Harris.

Price Movement

In a year’s time, shares of L3Harris have gained 59.5% compared with the industry’s 20.1% rise.

Zacks Rank & Another Key Pick

L3Harris currently carries a Zacks Rank #2 (Buy).

Another top-ranked stock in the same space is Northrop Grumman (NYSE:NOC) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northrop Grumman delivered average positive earnings surprise of 11.48% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 3.8% to $20.38 over the past 90 days.

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