L-3 Communications Wins Contracts

Aerospace and defense operator L-3 Communications Holdings Inc. (LLL - Analyst Report) won 2 contracts of a combined value of $25 million from the U.S. Army and U.S. Navy.

As per the contract with the U.S. Navy, L-3 Communications will repair items in support of the H-1 helicopter for the Naval Inventory Control Point in Philadelphia. The $7.5 million contract will be carried out in Cape Canaveral Florida with completion expected by August 2015.

In the other contract, which was awarded by the U.S. Army, L-3 Communications will be required to make flight data recorders and interconnection boxes for use by the Army. This contract is for $17.5 million and is expected to be complete by August 15, 2015.

Since the conclusion of second-quarter 2010, L-3 Communications has won a few new contracts, the most significant among these are the $255.3 million from the U.S. Army for 220 enhanced night vision goggles test articles and associated contracts date requirement lists and the $200 million indefinite delivery/indefinite quantity (ID/IQ) contract from the U.S. Air Force.

During the second-quarter conference call, the company lowered its consolidated sales guidance for 2010 by $200 million to a new range of $16.0 billion to $16.1 billion. Segment-wise, L-3 Communications expects lower sales of $200 million from Aircraft Modernization and Maintenance and $100 million from Electronic Systems. We believe the new contract wins will benefit the company in the second half of the year, cushioning revenue losses from these two segments.

The major peers of the company are Honeywell International Inc. (HON - Analyst Report), Lockheed Martin Corp. (LMT - Analyst Report) and Raytheon Co. (RTN - Analyst Report). On a competitive landscape the operating margins of L-3 Communications fared better than its peers in the trailing twelve months.

We presently have a Zacks #3 Rank (short-term 'Hold' recommendation) on shares.

Based in New York, L-3 Communication is a leading supplier of secure communications, simulation, training systems, avionics, ocean and telemetry products, space and wireless products, and microwave components, which are used in a number of aerospace and defense platforms.

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