The Zacks Analyst Blog Highlights: Boeing, Lockheed Martin, Raytheon, L-3 Communications Holdings and Textron

Jul 09, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, July 9, 2014 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Boeing Co. (NYSE: BA-Free Report), Lockheed Martin Corp. (NYSE: LMT-Free Report), Raytheon Co. (NYSE: RTN-Free Report), L-3 Communications Holdings Inc. (NYSE: LLL-Free Report) and Textron Inc. (NYSE: TXT-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

Defense Industry Stock Update

Among the important updates over the past five trading days, The Boeing Co. (NYSE: BA-Free Report) reported upbeat first half 2014 delivery numbers, thereby retaining its title of the world's largest airplane manufacturer. Lockheed Martin Corp. (NYSE: LMT-Free Report) announced that it will shift active salaried workers to an enhanced defined-contribution program in order to manage rising costs and reduce long-term liabilities (see the last recap here: Defense Stock Roundup for Jul 1, 2014).


Iraq's new parliament delayed its next session for five weeks, further deepening the country's political turmoil. The al-Qaeda-connected Sunni militant group, the Islamic State in Iraq and Syria (ISIS), also claimed the life of an army general near Baghdad. The insurgents had already declared the establishment of a caliphate, an Islamic state, spanning large areas of Iraq and Syria.

As per media reports, Iraq's Prime Minister, Nouri al-Maliki might cut defense ties with the U.S. and collaborate with Iran and Russia instead. Mr Maliki is already under pressure from Washington to step down. Signed in 2008, the Strategic Framework Agreement with the U.S. sought to arrive at a long-lasting relationship between the two countries that would encourage peace, stability and democracy in Iraq. In return, the country granted defense contracts worth billions of dollars. The severing of defense ties with the U.S. will thus be a breach of contract.

Recap of the Week's Most Important Stories

1.    Boeing reported strong delivery numbers for the second quarter as well as the first half of 2014, beating its archrival, Airbus (read more: Boeing Beats Airbus in 1H14 Deliveries).

Boeing also secured a sizable contract from the National Aeronautics and Space Administration (NASA) to develop the core stage of the largest ever Space Launch System (SLS) rocket (read more: Boeing Gets NASA Contract for Largest Space Launch System).

2.    Lockheed Martin announced that it will freeze its defined benefit pension plan and move active salaried workers to an enhanced defined-contribution program (read more: Lockheed Martin to Freeze Pension Program). This Bethesda, MD-based prime defense contractor beat Raytheon Co. (NYSE: RTN-Free Report) to clinch a $200 million missile contract from the U.S. Department of Defense (DoD).

In a separate development, most of Lockheed Martin's F-35 fighter jets are undergoing inspections, following the grounding of the entire fleet last week. Moreover, contract negotiations for the next batch of fighter jets and engines have been put on hold. The jet was expected to make its planned international debut at two upcoming airshows in the U.K. starting Friday. No decision has been taken on whether to allow the jets to fly to Britain yet.

3.    A Raytheon and Lockheed Martin joint venture – Javelin – won a $162 million modification to a firm-fixed foreign military sales contract from the U.S. Army Contracting Command, Huntsville, AL. Javelin will purchase 361 Block 1 tactical missiles and 137 commands launch unit retrofits for the U.S. Army; 189 Block 1 tactical missiles and 147 Block 1 tactical missiles for the U.S. Marine Corps; and 20 Block 1 tactical missiles for New Zealand and Jordan.

4.    An L-3 Communications Holdings Inc. (NYSE: LLL-Free Report) unit received a $151.4 million T-45 aircraft maintenance contract (read more: L-3 Communications Gets US Navy T-45 Maintenance Contract).

5.    The latest defense contractor to join the acquisition drive is Textron Inc. (NYSE: TXT-Free Report). The company's business arm TRU Simulation + Training Inc. acquired ProFlight, LLC, a leading innovative and advanced pilot training service provider (read more: Textron Unit Acquires ProFlight, LLC).


In the past one week, a few defense companies appear to have been recovering from their earlier lows. Importantly, Boeing gained 2.27% over the past five trading days.

The biggest loser was Lockheed Martin, dropping 1.99% over the time frame, with Textron following suit. In the past six months, the companies have reported in the green (except for Boeing). All the other big firms have reported single-digit share price appreciation in the last six-month time fame. Boeing has, however, lost 8.33%.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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