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The Zacks Analyst Blog Highlights: Huntington Ingalls Industries, Raytheon, Lockheed Martin, General Dynamics And Textron

Published 06/25/2017, 09:30 PM
Updated 07/09/2023, 06:31 AM

For Immediate Release

Chicago, IL – June 26, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Huntington Ingalls Industries, Inc. (NYSE: HII Free Report ), Raytheon Company (NYSE:RTN) (NYSE: RTN Free Report ), Lockheed Martin Corp. (NYSE: LMT Free Report ), General Dynamics Corp. (NYSE: GD Free Report ) and Textron Inc (NYSE:TXT). (NYSE: TXT Free Report ).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

Here are highlights from Monday’s Analyst Blog:

Defense Stock Roundup: LMT-Tata Group Tie Up for F-16, HII, GD, RTN Get Big Deals from Pentagon

The Pentagon allocated ample funds to the U.S. defense stocks last week. Meanwhile, recently in a meeting with Chinese officials, U.S. Defense Secretary, James Mattis emphasized on improving bilateral defense relationships between the two nations, putting more prominence on the Trump administration’s initiative to build "constructive and results-oriented" partnership with Beijing.

Naturally, if any positive outcome surfaces later as a result of this meeting, the U.S. defense majors will gain substantially. Collectively, these factors boosted investors’ optimism for the Aerospace-Defense industry. This, in turn, led the S&P 500 Aerospace & Defense (Industry) Index to gain 1.3% in the trailing five trading sessions.

Among the last week’s highlights, defense majors –Huntington Ingalls Industries, Inc. (NYSE: HII Free Report ), Raytheon Company (NYSE: RTN Free Report ), Lockheed Martin Corp. (NYSE: LMT Free Report ), General Dynamics Corp. (NYSE: GD Free Report ) and Textron Inc. (NYSE: TXT Free Report ) – clinched a handful of contracts from the U.S. Department of Defense. Meanwhile, United Technologies Corp (NYSE:UTX). announced some upgrades in its defense technologies, whereas Lockheed Martin inked a deal with Tata Group to start production of F-16 jet in India.

(Read Defense Stock Roundup for June 16, 2017 here )

Recap of the Week’s Most Important Stories

1. Military shipbuilder, Huntington Ingalls, secured a modification contract worth $3 billion from the U.S. Navy to procure the detail, design, and construction of the Landing Helicopter Assault (LHA) Replacement (LHA(R)) Flight 1 Amphibious Assault Ship (LHA 8).

Work is scheduled to be completed by Jan 2024. The majority of the work will be performed in Pascagoula, MI. The rest will be executed in various other locations in the U.S.

The amphibious assault ship is a kind of commando carrier used to land and support ground forces on enemy territory. The largest fleet of such ships is operated by the U.S. Navy, which specifically includes large-deck amphibious ships such as the Landing Platform Helicopter (LPH), Landing Helicopter Assault (LHA), and Landing Helicopter Dock (LHD) (read more: Huntington Ingalls Wins $3B Navy Contract for LHA 8 ).

2. Defense behemoth Raytheon’s business unit, Missile Systems, clinched a contract worth $617.6 million from the U.S. Navy to procure full-rate production requirements and spares for fiscal 2017 Standard Missile-2 (SM-2). The procurement will be done for the U.S. and Allied Foreign Navies. Work is scheduled to be completed by Mar 2022.

The contract includes options that will take the cumulative value of the contract to $652.8 million, if exercised. The majority of the work will be carried out in Tucson, AZ, while the rest will be executed in various locations across the U.S.

Standard Missile-2 is the world's leading fleet-area air defense weapon. It provides protection against a wide range of advanced threats. To date, Raytheon has delivered over 5000 SM-2’s to the U.S. and its allies (read more: Raytheon Secures $618M FMS Contract from Navy for SM-2 ).

3. Pentagon’s largest defense contractor, Lockheed Martin ’s business unit, Missiles and Fire Control (MFC), won a foreign military sales (FMS) contract worth $471.7 million from the U.S. Army. Per the contract, the company will produce the 12th Lot of Guided Multiple Launch Rocket System (GMLRS). Work is scheduled to be over by Jul 31, 2019, and will be executed in Grand Prairie, TX.

Per the terms, the contract covers purchase of 2,868 rockets for alternative warhead, 648 rockets for unitary warhead and 370 pods for low-cost reduced-range practice rocket. Lockheed Martin will also provide the U.S. Army with integrated logistics support.

GMLRS provides dependable precision strike and continues to exceed operational-readiness requirements. It is specifically designed to destroy high-priority targets at ranges up to 70 kilometers and is employed in both urban and non-urban environments (read more: Lockheed Martin Secures $472M FMS Contract for GMLRS ).

Moreover, Lockheed Martin recently inked a landmark deal with Tata Advanced Systems Limited (TASL) to jointly manufacture the former’s F-16 Block 70 fighter jets in India. This comes as a move to expand its foothold in the market of India, the world’s largest military weapons importer. Notably, TASL is the defense arm of India’s multinational conglomerate, Tata Group.

Per the terms, Lockheed Martin will shut down its F-16 production unit in Fort Worth, TX and move the entire production base to India. This, in turn, will offer India an opportunity to manufacture, operate as well as export the newest model of the world’s most successful, combat-proven aircraft.

While India gets a fourth-generation multi-role fighter jet from Pentagon’s largest defense contractor through this deal, Lockheed Martin gains enhanced space at its Fort Worth facility for production of more F-35. In addition, Lockheed Martin will gain increased profit from exporting F-16 jets to the neighboring countries of India that offer an emerging market for these jets at present (read more: Lockheed Inks Deal with Tata Group to Produce F-16 in India ).

4. Defense giant General Dynamics’s Mission Systems business unit has won a contract worth $250 million to modify, test, train and sustain the Prophet system. Work related to this deal is scheduled to be over by Jun 15, 2022. This contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, MD.

Prophet is a 24-hour, all-weather, near-real-time, ground-based, tactical Signals Intelligence (SIGINT) and electronic warfare (EW) system. It serves as the principal SIGNIT and EW system for the U.S. Army and armored cavalry regiment commander.

The Prophet Enhanced is an improved version of the Prophet SIGNIT, designed for integration into the US Army's Medium Mine Protected Vehicles (MMPV) (read more: General Dynamics Wins $250M Deal for Prophet SIGNIT System ).

5. Multinational conglomerate, Textron, announced that its Bell segment has been awarded a $146.6 million long-term repair order from Naval Supply Systems Command Weapon Systems Support, Philadelphia, PA.

Per the terms, Textron will repair 35 items used on the UH-1Y and AH-IZ aircraft. The project will be carried in the company’s facility in Fort Worth, TX. Work related to this deal is expected to be over by Jun 2019.

Notably, the Bell UH-1Y, also known as Super Huey, is a twin-engine combat-proven utility helicopter slated to support the U.S. Marine Corps global missions. On the other hand, based on the AH-1W SuperCobra, the Bell AH-1Z Viper is a twin-engine attack helicopter, primarily developed for the U.S. Marine Corps under the H-1 upgrade program (read more: Textron Wins $146.6M Aircraft Repair Order From Navy ).

6. Industrial goods manufacturer United Technologies’ unit, UTC Aerospace Systems, recently announced that it has started upgrading propellers for the U.S. Air National Guard LC-130 aircraft with the installation of the NP2000 propeller system. Per the contract, the company will upgrade 12 of the U.S Air National Guard's fleet of LC/C-130H aircraft.

The C-130H military aircraft comprises the upgraded NP2000 propeller system, which has reduced support costs and improved electronic control system. Using the NP2000 propeller system, the C-130H aircraft ensures that its crew is mission-ready (read more: UTX's Affiliate Upgrades Propeller Systems for U.S. Airforce ).

Moreover, United Technologies’ business arm, Pratt & Whitney, recently declared that its F119 engine has exceeded 500,000 engine flight hours. The achievement not only highlights the company’s expertise over fifth-generation engine technology, but also reflects its commitment toward the U.S. Air Force (read more: United Technologies' Wing F119 Engine Crosses Key Milestone ).

Performance

Over the last five trading sessions, the major defense stocks have put up a mixed show. While shares of Boeing (NYSE:BA) and L3 Technologies Inc. rallied, a few others saw a decline in share price.

Over the last six months, the performance of the industry has been stellar, except that of Textron. Boeing gained the most, with its shares rising 26.66%, followed by General Dynamics.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.



Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report

Raytheon Company (RTN): Free Stock Analysis Report

Lockheed Martin Corporation (NYSE:LMT): Free Stock Analysis Report

General Dynamics Corporation (NYSE:GD): Free Stock Analysis Report

Textron Inc. (TXT): Free Stock Analysis Report

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