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GD Joins USAMRMC in $41.8M Contract

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General Dynamics Corporation’s (GD - Analyst Report) unit, General Dynamics Information Technology, has entered into an agreement, worth $41.8 million with the U.S. Army Medical Research Materiel Command (“USAMRMC”) under its TRICARE Evaluation, Analysis and Management Support (“TEAMS”) contract program.

Per this task order, the company will offer service support assistance to the USAMRMC for vaccine, drug and medical device development programs under the U.S. Army Medical Materiel Development Activity (“USAMMDA”). The tenure of the TEAMS contract program is four years and seven months.

USAMMDA is the U.S. Department of Defense’s (“DoD”) advanced medical materiel development initiative for designing new products to protect and preserve the lives of service members. It creates new types of vaccines, drugs and medical support devices, which subsequently enhance readiness while providing better standard of quality medical care to the DoD. Further, it also maximizes the survival rates related to medical casualties in the battleground.

In the future, General Dynamics will provide a wide array of services to facilitate the USAMMDA guide for new medical technologies through the USFDA regulatory and certification procedures. The company will also work on strategies to convey these new products into the end users.

As per the U.S. Food and Drug Administration (“USFDA”) regulatory and certification, the USAMMDA works along with the USAMRMC to develop medical materials for battlefield personnel.

During second-quarter 2012 earnings call, General Dynamics lowered its full-year 2012 earnings guidance range to $7.00 - $7.10 per share from its earlier projection of $7.10 - $7.20 per share. This earnings revision was primarily due to the possibility of a delay in the awarding of contract of Information Systems and Technology’s tactical communications business. At the end of second-quarter 2012, General Dynamics’ total order backlog was $52.4 billion, down from the year-ago backlog of $57.1 billion.

As per the Zacks Consensus Estimate, General Dynamics’ third-quarter and full-year 2012 earnings per share are expected to be $1.77 and $7.10, respectively.
    
We view General Dynamics Corporation as an organization with strong revenue exposure in wide range of products and services like business aviation, combat vehicles, weapons systems, shipbuilding design, repair and construction, and information systems. We believe this expanded series of products and services will ensure the company to keep its overall growth momentum steady in the future.

We are skeptical about the challenges of budget cutbacks and the risks related to the execution of key projects. General Dynamics Corporation currently retains a Zacks #3 Rank (Hold rating).

Falls Church, Virginia-based General Dynamics Corporation engages in mission-critical information systems and technologies; land and expeditionary combat vehicles, armaments and munitions; shipbuilding and marine systems; and business aviation. The company competes with Lockheed Martin Corporation (LMT - Analyst Report).

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