The Zacks Analyst Blog Highlights: General Dynamics, Exelis, Boeing, Lockheed Martin and United Technologies
CHICAGO, Sept. 10, 2014 /PRNewswire/ -- Zacks.com 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 General Dynamics Corp. (NYSE:GD-Free Report), Exelis Inc. (NYSE:XLS-Free Report), Boeing Co. (NYSE:BA-Free Report), Lockheed Martin Corp. (NYSE:LMT-Free Report) and United Technologies (NYSE:UTX-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 Stock Roundup
Among last week's important updates, General Dynamics Corp. (NYSE:GD-Free Report) received a big award from the British defense ministry. This defense behemoth is also busy restructuring its businesses to maintain margins in a declining revenue environment. As for news from the war-torn Middle East, Iraq approved a new government, opening the path for more U.S. intervention.
(Read the last recap here: Defense Stock Roundup for Aug 27, 2014.)
Iraq Update
Giving in to international as well as domestic pressure, Iraq swore-in a new government. This opened up the way for increasing U.S. military support to fight Islamic extremists in the country. Haider al-Abadi, a Shi'ite Islamist, has now been confirmed as the prime minister. He will be supported by minority Sunni and Kurdish deputies as well as the majority Shi'ite members in his cabinet to bring back Iraq from the brink of crisis.
Meanwhile, the U.S. has carried out five air strikes on Islamist insurgents attacking the country's Haditha dam. The strikes have exhausted an ISIS patrol trying to attack the dam, which is considered to be Iraq's second biggest hydroelectric facility. The Haditha dam also provides millions with water. In a press statement, released on Sep 7, 2014, Pentagon Press Secretary Rear Admiral John Kirby said that any loss of control, and consequent flooding, of the dam would lead to dire results, threatening U.S. personnel and facilities in and around Baghdad, as well as jeopardizing thousands of Iraqi citizens.
Recap of the Week's Most Important Stories
1. General Dynamics Corp.'s British arm secured a $5.76 billion contract from the British defense ministry for a new armored fighting vehicle – SCOUT Specialist Vehicle (SV) (read more: General Dynamics Wins $5.76B U.K. Armored Vehicle Deal).
2. In a ploy to avert budget austerities, General Dynamics decided to merge General Dynamics Advanced Information Systems and General Dynamics C4 Systems into a new business unit, General Dynamics Mission Systems. The restructuring − effective from Jan 2015 – is expected to make the company more efficient, cost-effective and responsive to customer needs.
3. Defense contractor Exelis Inc. (NYSE:XLS-Free Report) announced that the planned spin-off of its Mission Systems business will take place on Sep 27. The new entity – Vectrus − is set to begin trading on the New York Stock Exchange as VEC on Sep 29. Meanwhile, Exelis shares will continue to trade under the ticker symbol "XLS."
The split will enable each company to more effectively compete in their respective markets. Vectrus will be responsible for working mainly on contracts with the U.S. government. It will provide infrastructure asset management, logistics and supply chain management services, as well as information technology and network communication services to U.S. government customers worldwide. Post spin-off, Exelis will have greater focus on higher margin strategic growth platforms including critical networks, ISR (intelligence, surveillance and reconnaissance) and analytics, electronic warfare and aerostructures.
4. The Boeing Co. (NYSE:BA-Free Report) won a foreign military sales (FMS) contract, worth $234.7 million, associated with the production and delivery of AH-6I aircraft for Saudi Arabia (read more: Boeing Company Gets $234.7M AH-6I Aircraft Defense Award).
5. Defense prime Lockheed Martin Corp. (NYSE:LMT-Free Report) secured various small ticket programs from the U.S. Department of Defense (DoD) funding list. The most notable of them included a $45 million IT contract to produce, install and maintain a "General Service, Cross Domain Solution" called Radiant Mercury for the Pentagon (read more: Lockheed Martin Clinches Three Back-to-Back DoD Contracts).
Meanwhile, Pratt & Whitney − the engine manufacturer of Lockheed Martin's F-35 Joint Strike Fighter (JSF) and a unit of United Technologies (NYSE:UTX-Free Report) − expects to start testing this month for a potential fix to the engine problem that caused a F-35 fighter jet to catch fire in June. The company also agreed to share the cost of any future engine design changes with the government. Lockheed Martin's F-35 JSF is the most pricey weapons system in U.S. history and has a potential price tag of $400 billion to $1 trillion. Its development has been marked by cost overruns, schedule delays and technical problems.
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