Back to top

Image: Bigstock

Boeing/Lockheed JV Unit Wins Two Contracts Totaling $417M

Read MoreHide Full Article

United Launch Services, LLC (“ULS”), a subsidiary of United Launch Alliance (“ULA”) – a Lockheed Martin Corp. (LMT - Free Report) and The Boeing Co. (BA - Free Report) joint venture (“JV”) – has won two modification contracts, totaling $416.9 million, from the U.S. Air Force for launch vehicle production services (“LVPS”). Both the contracts were awarded by the Space and Missile Systems Center, Los Angeles Air Force Base, CA.

Contract Details

The first contract is valued at $270.4 million. Per the contract, ULS will provide the required LVPS to support the Air Force Delta IV Heavy’s launch vehicle configuration and transportation. The modification includes pre-priced contract line items for the Delta IV Heavy LV configuration.

Work is scheduled to be complete by Dec 29, 2020 and will be performed in Centennial, CO; Decatur, AL; and the Vandenberg Air Force Base, CA. The contract will use fiscal 2017 missile procurement funds.

The second contract is valued at $146.5 million. Per the contract, ULS will provide the required LVPS to support the Air Force Atlas V 551, 5M Payload Fairing 9ft Plug’s launch vehicle configuration and transportation. The modification includes pre-priced contract line items for the Atlas V 551 LV configuration.

Work is scheduled to be complete by Dec 12, 2020 and will be performed in Centennial, CO; Decatur, AL; and the Vandenberg Air Force Base, CA. The contract will use fiscal 2016 missile procurement funds.

A Brief Note on Delta IV Heavy & Atlas V 551

Delta IV Heavy is one version of the workhorse launcher family of the Delta IV Evolved Expendable Launch Vehicles (EELV). Among the Delta IV rockets, Delta IV Heavy is the most powerful launcher, and is equipped with a Common Booster Core (“CBC”) and two strap-on CBCs functioning as boosters, a five-meter second stage and a five-meter Payload Fairing.

On the other hand, the Atlas V 551 launch vehicle is part of the flight proven Atlas V 400/500 family that is operated by ULA. Atlas V rockets began flying in 2002 and have been mostly successful so far. It employs the conventional Atlas V design with a Common Core Booster and a Centaur Upper Stage on top of it. In fact, Atlas V 551 is the largest of the Atlas V Launcher Family flown so far that attributes five Solid Rocket Boosters and a 5.4-meter Payload Fairing.

About ULA

Formed about a decade ago, this 50:50 JV provides the U.S. government missions with affordable, reliable and assured access to space. It has three launch vehicles – Atlas V, Delta IV and Delta II. ULA's launch vehicles have played a major role in the U.S. space ventures given its highest commitment to crew safety and mission success.

Price Movement

Lockheed Martin’s stock has improved about 19.9% in the last one year, underperforming the Zacks categorized Aerospace/Defense industry’s gain of 25.1%. This could be because the earlier budget cuts have put pressure on the top line although the present defense budget is more in favor of the sector. Budget deficits and political uncertainty make future defense budgets vulnerable to cutbacks.



On the other hand, Boeing’s stock has improved about 39.4% in the last one year, outperforming the Zacks categorized Aerospace/Defense industry’s gain. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.

Zacks Rank & Key Picks

Lockheed Martin currently has a Zacks Rank #2 (Buy), while Boeing carries a Zacks Rank #3 (Hold). A couple of other favorably placed stocks in the aerospace and defense space include Huntington Ingalls Industries, Inc. (HII - Free Report) and Leidos Holdings, Inc. (LDOS - Free Report) .

On an average, Huntington Ingalls has delivered a positive earnings surprise of 2.21% in the last quarter. The company’s 2017 earnings estimates increased 2.7% over the last 30 days. Huntington Ingalls sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Leidos Holdings, a Zacks Rank #2 stock, delivered a positive earnings surprise of 5.80% in the trailing four quarters. The company’s 2017 earnings estimates increased 2.5% in the last 60 days.

Zacks’ Best Private Investment Ideas

In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?

Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>

Published in