Lockheed Martin (LMT) Wins $88M Deal to Support F-35 Program
Lockheed Martin Corp.’s LMT Aeronautics business division recently won an $87.5-million contract to provide engineering support for the development of the Autonomic Logistics Information System (ALIS) and the transition to the newly developed F-35 Operational Integrated Data Network (ODIN). The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the deal terms, Lockheed Martin will also provide software and hardware engineering in support of F-35 ODIN development, delivery and associated data management activities for the Navy, Marine Corps, Air Force and non-Department of Defense participants. Work related to the deal will be executed in Orlando, FL, and Fort Worth, TX, and is expected to be completed by June 2022.
A Brief Note on ALIS and ODIN
Lockheed Martin’s ALIS and ODIN provide maintenance capabilities to support worldwide F-35 aircraft operations. The ALIS was designed to support the F-35 fleet’s daily operations, ranging from conducting mission planning and flight scheduling to repairs along with other scheduled maintenance, as well as the tracking of parts and other key functions necessary to support the Joint Strike Fighter. Meanwhile, ODIN is a cloud-based system that will reduce administrator workload on the F-35 jet and designed to deliver data on a near real-time basis.
Rising Demand & Cost-Reduction Initiatives Benefit F-35 Program
Rising security threats from terrorist activities and adverse geopolitical situations have resulted in an increased need for enhancing the nation's defense budget, of which combat aircraft constitutes a major portion. To this end, it is imperative to mention that given its advanced stealth capabilities, combined with the advancements in its maintenance capabilities, the F-35 jet dominates the combat aircraft market. Furthermore, the F-35 program has been strongly supported by an international team of leading aerospace majors, such as Northrop Grumman NOC, BAE Systems BAESY and Pratt & Whitney, a unit of Raytheon Technologies RTX.
From the perspective of the F-35 program’s market price, the company witnessed a notable drop in the price of this project in recent times, making it all the more lucrative. Unit prices are expected to continue to drop and the overall price per jet might slip below the $100-million mark in the upcoming period. Such initiatives along with continued demand growth will usher in more contract wins for Lockheed Martin, like the latest one, thereby fueling the top line.
Robust Budget Boosts Prospects
Furthermore, the fiscal 2021 defense budget proposal reflects a solid spending provision of $56.9 billion for missile aircraft. Interestingly, an amount of $11.4 billion has specifically been proposed for the F-35 program. If approved, such a stupendous budgetary amendment will reflect massive growth prospects for Lockheed Martin’s F-35 program in the days ahead.
Price Movement and Zacks Rank
In a year’s time, shares of this Zacks Rank #3 (Hold) company lost 5% compared with the industry’s 32.5% decline. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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