L3 Technologies, Inc. (LLL - Free Report) recently clinched a contract worth $454 million for delivering the next-generation WESCAM MX-10D electro-optical/infrared (EO/IR) and laser designator sensor suite to the U.S. Army. Originally a five-year contract, the U.S. Army will be given an option to extend contract validation for an additional five years, if required.
What’s WESCAM MX-10D Sensors?
L3 Technologies’ WESCAM MX-10D sensors are primarily effective for low-altitude tactical surveillance, target acquisition and designation missions requiring low-weight installation flexibility. Its WESCAM imaging and targeting turrets are known to deliver precision situational awareness, which enable users to overcome emerging regional and global threats. These modernized ISR systems operate from the Army’s Tactical Unmanned Air Systems Shadow unmanned aerial vehicle (UAV) and provide advanced capabilities to collect critical information.
WESCAM’s Importance for L3 Technologies
Mid-July 2018, the company revealed that its WESCAM business won orders worth more than $300 million in the first half of 2018. This reflects the solid demand L3 Technolgies enjoys for its WESCAM sensors.
Furthermore, toward the end of July 2018, WESCAM successfully delivered its first MX-15 EO/IR system to Airbus Defense and Space, in support of Canada’s Fixed-Wing Search and Rescue (FWSAR) aircraft replacement program. These developments should allow L3 Technologies to secure a dominant position in the global UAV drone market. Also, considering surveillance and targeting upgrades, this may further expand the company’s growth opportunities globally for its EO/IR sensors.
Additionally, increasing geopolitical and socio-economic tensions, and recent technological advancements in unmanned aerial vehicle drones globally is likely to further augment demand for UAV in emerging countries. This has significantly boosted growth prospects of the global UAV market, which is projected to see a CAGR of 14.2% from 2018 to 2025, to reach a value of $52.3 billion in 2025. Such solid growth opportunities offered by this market should bode well for defense contractors like L3 Technologies that manufactures valued sensors for the global UAV market.
In a year’s time, shares of L3 Technologies increased 13.3% compared with the industry’s 21% rally. The underperformance can be attributed to weak performance in some of the company’s product lines.
Zacks Rank & Other Stocks to Consider
L3 Technologies currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the same sector are Huntington Ingalls Industries (HII - Free Report) , Heico Corporation (HEI - Free Report) and FLIR Systems (FLIR - Free Report) .
While Huntington Ingalls sports a Zacks Rank #1 (Strong Buy), Heico and FLIR Systems carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Ingalls pulled off an average positive earnings surprise of 9.48% for the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has moved 6.4% north to $17.24 in the last 90 days.
Heico came up with an average positive earnings surprise of 2.15% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen 2.73% to $1.88 in the last 90 days.
FLIR Systems came up with an average positive earnings surprise of 8.49% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen 2.78% to $2.22 in the last 90 days.
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