Lockheed Martin Corporation (LMT) has received a $207 million contract modification from the US Naval Air Systems Command to integrate unique Israeli equipment into the F-35 Joint Strike Fighter ("JSF"). The contract is a part of Pentagon's Foreign Military Sales program and the task is expected to be completed by May 2016.

Per the contract modification, the company will develop hardware and software for the Israel F-35A conventional take-off and landing ("CTOL") air system. This will integrate Israeli systems from the initial requirements development to the Preliminary Design Review ("PDR").

The contract had originated at the end of July 2012. In July 2012, Pentagon had entered into an agreement with Lockheed for the enhancement of Electronic Warfare ("EW") equipment on the F-35 fighter jet and integrate Israeli-unique systems beginning in 2016 under a $450 million program.

As a result of this contract, negotiations between Israel and the US will be finalized as special adaptation of the F-35 aircraft was a key element in Israel's agreement to buy F-35 jets from Lockheed in October 2010.

Joint Strike Fighter ("JSF") is a development and acquisition program, which is intended to replace a wide range of existing fighter, strike, and ground attack aircraft for the United States, the United Kingdom, Canada, Australia and their allies.

Lockheed Martin is the largest defense contractor in the world. The company's customer base includes the U.S. government, foreign governments, and other commercial buyers. Few days back, Lockheed Martin posted second-quarter 2012 continuing earnings of $2.38 per share, beating the Zacks Consensus Estimate of $1.92.

Going forward, we are bullish based on the incremental dividend payout, a stable order backlog, the company's focus on debt repayment and its ongoing share repurchase program. The company presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Out perform recommendation on the stock.

Based in Bethesda, Md., Lockheed Martin is a global security company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

The company mainly competes with General Dynamics Corporation (GD) and Northrop Grumman Corporation (NOC).

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Tickers in this Article: NOC, GD, LMT

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