(LLL) L-3 Communications Holdings Announces Another Half-Billion Contract

L-3 Communications Holdings Inc. (LLL) has won a U.S. Missile Defense Agency contract valued at up to $538 million for mission support of the Airborne Sensors Program.

The deal covers a five-year base period plus five one-year options, the Pentagon said in its daily contract digest. The program involves sensors and platforms required to support the layered U.S. bulwark against ballistic missiles that could be fired by countries like Iran and North Korea.

L-3 Communications receives regular contracts from the Defense departments.

Given its overall strong performance during the first quarter in 2011, L-3 Communications raised its revenue guidance for 2011 to a band of $15.7 billion to $15.9 billion from the prior expectation of $15.5 billion to $15.6 billion. The earnings expectations for 2011 were also raised to $8.50–$8.60, from its previous guidance range of $8.40–$8.55. The Zacks Consensus Estimate for 2011 is presently $8.54 per share.

L-3 Communications is one of the best-positioned pure defense players based on its non-platform focus, broad diversification of programs, strong order bookings and order backlog, robust cash flow generation and its focus on shareholder value. L-3 Communications’ strong balance sheet provides financial flexibility in matters of incremental dividend, ongoing share repurchase and earnings accretive acquisitions.

However, this is offset by the loss of key contracts, a backlog skewed toward fixed price contracts and apprehensions over defense spending under the Obama administration. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. The company competes with Raytheon Company (RTN) and Lockheed Martin Corporation (LMT).

Based in New York City, L-3 Communications is a prime contractor in C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, aircraft modernization and maintenance, and government services. L-3 is also a leading provider of a broad range of electronic systems used on military and commercial platforms.

L-3 COMM HLDGS (LLL): Free Stock Analysis Report

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RAYTHEON CO (RTN): Free Stock Analysis Report

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