Lockheed Stock Dips As Q2 Earnings Mixed, 2021 Guidance Raised| Investor’s Business Daily
F-35 maker Lockheed Martin (LMT) reported mixed second-quarter results while the top Pentagon contractor also lifted its 2021 earnings forecast early Monday. Lockheed stock fell.
The results kick off a busy week for aerospace and defense stocks. Raytheon Technologies (RTX) reports Tuesday, Boeing ((BA)) and General Dynamics (GD) are due Wednesday. Northrop Grumman (NOC) reports Thursday.
Earnings rose 12.6% to $6.52 a share, including a loss of 61 cents a share related to a classified aeronautics program. That just missed forecasts for $6.53 per share, according to FactSet data. Revenue climbed 5% to $17.03 billion, edging past estimates for $16.9 billion.
Aeronautics revenue increased 3% to $6.67 billion, led by higher F-16 and F-35 sales. Missiles and fire control revenue grew 5% to $2.94 billion, led by the Army Tactical Missile System and Long Range Anti-Ship Missile. Rotary and missions systems revenue rose 5% to $4.24 billion on Sikorsky helicopter sales. Space revenue climbed 10% to $3.18 billion.
Lockheed raised its full-year EPS view to $26.70-$27.00 from $26.40-$26.70 while keeping its revenue view at $67.3 billion-$68.7 billion. Analysts currently see EPS of $26.74 on revenue of $68.35 billion.
CFO Ken Possenriede said the development costs on the classified program will eventually lead to a production deal.
He later told Reuters that the classified program will “cost more and take longer” than anticipated. Once it goes into production, “there’ll be other pieces of this thing that will make this a strong business case for us.”
Possenriede didn’t specify what the classified program is developing. But the Lockheed is working on a next-generation stealth fighter as well as hypersonic technology.
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Shares fell 3.3% to 368.05 on the stock market today. Lockheed stock is forming a flat base with a 397.09 entry point, according to MarketSmith analysis. Top F-35 subcontractor Northrop was down 0.8%, while engine maker Raytheon edged up 0.2% ahead of its Q2 report early Tuesday.
In June, Switzerland selected the F-35 for a $6.5 billion fighter contract, beating offerings from Boeing ((BA)) and Airbus (EADSY). Switzerland is the 15th nation to join the F-35 program of record, according to Lockheed.
Lockheed is also jockeying for an $11 billion Finnish order expected later this year. Finland’s contract will be one of the biggest air-armament acquisitions in Europe.
But the stealth fighter might not complete a major piece of its combat simulator testing until 2022. The Pentagon needs the simulation testing for the F-35’s Initial Operational Test & Evaluation, which clears the way for full-rate production to begin.
The program has also come under fire over costs. Lockheed is working to improve the F-35’s affordability, saying the goal to reduce its cost per flight hour to $25,000 is achievable.
Meanwhile, missile sales, specifically hypersonic weapons, have also been a large growth area for the stock. In January Lockheed said it sees hypersonic weapons sales hitting $1.5 billion and sees that figure doubling to $3 million by 2025. That’s up from an estimated $1 billion in 2020 and $600 million in 2019.
But in April, Lockheed’s hypersonic missile prototype failed to launch in what was supposed to be its first flight. The Air-Launched Rapid Response Weapon (ARRW) failed to release from a B-52H Stratofortress and returned to Edwards Air Force Base in California.
Follow Gillian Rich on Twitter for defense news and more.
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