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A Lockheed Martin Corp. (LMT - Analyst Report) business wing, Mission Systems and Training, won a $295 million contract from the Department of Defense (DoD) on Jul 1, 2013, for work on the Aegis missile defense. This was the second largest order on a day the DoD doled out contracts worth $1.5 billion.

This is a sole-source, cost-plus-incentive-fee/cost-plus-award-fee/cost-plus-technical-schedule incentive fee contract modification, under which Lockheed Martin will provide system engineering and program management services.

This is mainly intended for the development of Aegis Ballistic Missile Defense Baseline which would support the 5.1 variant through the Critical Design Review and Increment-2 through the Preliminary Design Review. The company’s work on the contract will continue through Mar 30, 2015.

Bethesda, MD-based Lockheed Martin Corporation is a global security and aerospace company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. It is the largest U.S. defense contractor with a platform-centric focus and a steady inflow of follow-on orders due to its leveraged presence in the Army, Air Force, Navy and IT programs.

Despite a flurry of DoD contracts, the threat of sequestration, fear from budget uncertainty, the fate of high-cost programs, risks associated with key project executions and order cancellations cannot be denied. In this scenario, we believe more international order wins will partly counter the budget strictness of the U.S. DoD, providing a regular stream of revenues for the defense prime.

Recently, Lockheed Martin’s Mission Systems and Training division also won a $6.9 million cost-plus-incentive-fee, cost-plus-fixed-fee contract to perform additional Aegis development work for the U.S. Navy. The deal though minor has an option, which would boost the total value to $304.4 million, if exercised

Lockheed Martin is a Zacks Rank #2 (Buy) stock. Other stocks from the sector that are presently performing well include Erickson Air-Crane Inc. (EAC - Snapshot Report) with a Zacks Rank #1 (Strong Buy), and The Boeing Company (BA - Analyst Report) and Northrop Grumman Corp. (NOC - Analyst Report), both with a Zacks Rank #2 (Buy).

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