Shares of global defence giant Lockheed Martin are poised to capture investor attention on Wall Street this Tuesday, following the announcement of a substantial new contract from the United States Department of Defense. The deal, valued at a significant $52 million, underscores the company's pivotal role in maintaining critical military assets.
Details of the Major Defence Contract
On December 1, the New York Stock Exchange-listed defence contractor was officially awarded the contract. As per the details published on the US Department of Defense's website, this is a cost-plus-fixed-fee and firm-fixed-price contract worth $52,000,000. The primary scope involves the maintenance, operation, and configuration of the High Mobility Artillery Rocket System (HIMARS) and the Multiple Launch Rocket System (MLRS) Launcher Fleet.
The contract also covers the management of the associated repair parts storage and distribution centre. The US Army initiated the bidding process through an online solicitation, with Lockheed Martin emerging as the sole recipient of the award. The work for this project is scheduled to be carried out in Grand Prairie, Texas, with a completion deadline of May 14, 2021.
At the time of the award, the statement confirmed that army funds totalling $342,393, $1,412,854, and $2,189,923 were obligated for the project.
Concurrent Defence Developments and Stock Performance
In a separate but related development, the Pentagon announced on Monday that the US State Department has greenlit the potential sale of sustainment services for F-16 fighter jets and related equipment to Bahrain. This proposed foreign military sale carries an estimated price tag of $455 million, further highlighting the active defence export landscape.
On the trading front, Lockheed Martin's stock experienced a dip on December 1, closing 4% lower at $439.19 on the NYSE. This decline is attributed to profit-booking by investors after a three-session rally. The stock's recent trajectory shows a challenging period, with losses recorded in both November (down 6.9%) and October (down 1.47%), following a strong cumulative gain of over 17% in the preceding August and September.
Presently, the share price trades approximately 16% below its 52-week high of $521.50 and has depreciated by about 13% over the past year.
Expert Technical Analysis and Trading Strategy
Anshul Jain, Head of Research at Lakshmishree, provided a technical perspective on the stock's movement. He pointed out that Lockheed Martin's share price has broken below a tight bearish flag pattern on the daily charts, indicating a weakening trend across various timeframes.
"The stacked 10, 20, and 50 Exponential Moving Averages are sloping downward, demonstrating clear momentum alignment. Selling pressure has dominated trading volumes, adding credibility to the breakdown as the price lingers near the $439 support level," Jain explained. He added that a decisive fall below $435 could accelerate the downward risk toward the weekly swing low near $400.
For a bearish sentiment to be neutralised, the stock requires a recovery above the $452 mark. Until then, "risk remains skewed to the downside while volatility builds. Traders are advised to monitor news flow from the defence sector for potential catalysts. Short-term market dynamics currently favour sellers," Jain concluded.
Disclaimer: This article is intended for educational purposes only. The views and investment recommendations expressed belong to the individual analyst or brokerage firm and are not endorsed by the publication. Investors are strongly advised to consult with certified financial experts before making any investment decisions, as market conditions are subject to rapid change and individual circumstances vary.
