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Defense Stock Roundup: GD, LMT Win Big Contracts, CW Inks Acquisition Deal

Aparajita Dutta
·5-min read

A generous flow of contracts from the Pentagon is likely to have kept the major defense contractors buoyant in the past week. However, the stock market nosedived at the end of the week, after news of President Trump and his wife testing positive for coronavirus surfaced. This might have marred the growth extent of the defense stocks and in turn, caused major indices of the Aerospace-Defense space to end dismally, over the trailing five trading sessions. The S&P 500 Aerospace & Defense (Industry) index lost 1%, while the Dow Jones U.S. Aerospace & Defense index slipped 0.1% in the aforementioned time period.

Among the past week’s highlights, defense majors namely General Dynamics GD, Lockheed Martin Corp. LMT, and Raytheon Technologies, Inc. RTX secured a number of notable deals from the Department of Defense’s daily funding session. Moreover, Curtiss-Wright Corporation CW signed an acquisition deal worth $400 million.

Recap of Past Week’s Important Stories

1.    General Dynamics’ business unit, Land Systems, won a $1.22-billion contract for the production, testing and delivery of Interim Maneuver Short-Range Air Defense (IM-SHORAD) systems. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.

Work related to the deal is expected to get completed by Sep 30, 2025.

Notably, the IM-SHORAD system is the U.S. Army’s newest short-range air defense system armed with Hellfire and Stinger missiles and a 30mm cannon, which is intended to provide air and missile defense against unmanned aerial systems as well as fixed wing and rotary wing threats (read more: General Dynamics' Unit Wins $1.2B IM-SHORAD Production Deal).

2.    Lockheed’s Aeronautics business segment secured a modification contract for procuring economic order quantities of material to support low rate initial production of F-35 aircraft. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.

Valued at $709.8 million, the contract is expected to be completed by May 2026. The majority of the work related to the deal will be carried out in Fort Worth, TX (read more: Lockheed Wins $710M Deal for Supporting F-35 Jet Production).

Lockheed Martin’s business unit, Space Systems, clinched a modification contract for Trident II (D5) missile production, along with offering deployed systems support. Work related to the deal is scheduled to be completed by Sep 30, 2026.

Valued at $498.4 million, the contract was awarded by Strategic Systems Programs, located in Washington DC. Majority of the task will be completed in Cape Canaveral, FL; Kings Bay, GA; Bangor, WA and Sunnyvale, CA (read more: Lockheed Arm Wins $498M Deal to Produce Trident II Missiles).

3.    Raytheon Technologies won a $212.8-million Foreign Military Sale (FMS) contract from the Missile Defense Agency, Redstone Arsenal, AL.Per the contract terms, the company will provide the United Arab Emirates (UAE) with one Prime Power Unit and five years of sustainment services for two Terminal High Altitude Area Defense (THAAD) Army/Navy Transportable Radar Surveillance and Control-Series 2 (AN/TPY-2) radars.

Work related to the deal will be executed in Woburn, MA, and is expected to get completed by Sep 30, 2025 (read more: Raytheon Secures $213M FMS Deal to Support THAAD Program).

4.    Curtiss-Wright signed an agreement with Pacific Star Communications, also known as PacStar, to acquire the latter’s stock for $400 million in cash. The acquisition is expected to close in the fourth quarter of 2020, subject to regulatory approvals and other closing conditions.

Post-acquisition, the combination of Curtiss-Wright’s mission-critical mobile and secure COTS-based processing, data management and communications technologies and PacStar’s hardware and software solutions will enable the former to deliver advanced platform network integration and tactical data link network management to warfighters.On completion of the acquisition formalities, PacStar will operate within Curtiss-Wright's Defense segment and is expected to generate sales of more than $120 million by the end of 2020 (read more: Curtiss-Wright Signs Agreement to Acquire PacStar for $400M).

Performance

Over the past five trading sessions, the defense biggies put up a mixed show. While Boeing BA, General Dynamics and Raytheon Technologies gained, Lockheed Martin and L3Harris lost.

In the last six months, the industry's performance was mostly impressive, except that for L3Harris. Textron (TXT) gained the most with 41.3% surge in share price, followed by Boeing.

The following table shows the price movement of the major defense players over the last five trading days and during the last six months.

Company

Past Week

Last 6 Months

LMT

-1.16%

8.58%

BA

7.72%

34.81%

GD

1.65%

11.78%

RTX

3.22%

15.08%

NOC

-4.28%

0.11%

TXT

1.28%

41.29%

LHX

-2.78%

-3.04%

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The Boeing Company (BA) : Free Stock Analysis Report
 
General Dynamics Corporation (GD) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
CurtissWright Corporation (CW) : Free Stock Analysis Report
 
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
 
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