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Lockheed May Win $9.1B F-35 Deal Courtesy of Senate Panel

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Per a recent report by Reuters, the U.S. Senate Armed Services Committee has authorized $9.1 billion to procure 95 of Lockheed Martin Corp.’s (LMT - Free Report) F-35 aircraft, as part of the 2021 National Defense Authorization Act (NDAA). If passed into law, the legislation will enable Pentagon to make one or multiple deals worth $9.1 billion for the F-35 program.

Why F-35?

Rising security threat from terrorist activities and adverse geopolitical situations have resulted in an increased need for enhancing United States’ defense budget, of which combat aircraft constitutes a major portion. Given F-35’s advanced stealth capabilities, combined with fighter aircraft speed and agility, F-35 jet dominates the combat aircraft market.

Impressively, the F-35 program is supported by an international team of leading aerospace majors, which makes program all the more reliable and attractive. Notably, Northrop Grumman (NOC - Free Report) rendered its expertise in carrier aircraft and low-observable stealth technology to this program, while Raytheon Technologies’ (RTX - Free Report) Pratt & Whitney offered its world renowned jet engines. On the other hand, BAE Systems’ (BAESY - Free Report) short takeoff and vertical landing experience, and air systems sustainment supported the jet’s combat capabilities.

Lockheed sees frequent contract wins for the F-35 jets, both from Pentagon and other U.S. allies. For instance, last October, Lockheed finalized a $34-billion agreement for the production and delivery of 478 F-35s, at the lowest aircraft price in the progam’s history.

Growth Prospects

Over the long run, production of F-35 jets is expected to continue steadily, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy. Consequently, we expect Lockheed to witness more order inflows for F-35, which in turn should bolster this defense contractor’s top line.

Price Performance & Zacks Rank

Lockheed Martin’s stock has gained 12.7% in the past year against the industry’s decline of 15.8%.

Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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