Lockheed Surges After F-35 Deliveries Boost 2019 Forecast

(Bloomberg) -- Lockheed Martin Corp. raised its profit and sales forecasts for 2019 as the world’s largest defense contractor reaps the benefits from higher production of its F-35 fighter and a flurry of arms sales that have fattened its order backlog. The shares jumped.

• Earnings this year will be at least $20.05 a share, topping the high end of the previous forecast, the Bethesda, Maryland-based company said in a statement Tuesday. Analysts had expected $19.60, according to the average of estimates compiled by Bloomberg.

Key Insights

• The backlog grew to a record $133.5 billion, up $3 billion from the end of last year, as Lockheed closed a long-awaited $2.4 billion missile defense sale with Saudi Arabia. New orders are expected to boost growth, pushing free cash flow to $5.3 billion this year, according to Bloomberg Intelligence analyst Douglas Rothacker.
• Lockheed is benefiting from higher production and repair activity of its advanced F-35 fighter jet, which helped spur a 27 percent sales increase at the company’s aeronautics division.
• Analysts will be listening for details of Lockheed’s imperiled F-35 sales to Turkey during an 11 a.m. conference call. The dispute centers on the country’s plan to buy a Russian-made missile defense system and could disrupt the F-35 supply chain as well the $8 billion fighter deal, Rothacker said. Turkish companies supply about 7 percent of F-35 parts, he said.

Market Reaction

• Lockheed rose 5.7 percent to $333.10 at the close in New York, the biggest gain in more than two years. The shares have advanced 27 percent this year, while a Standard & Poor’s index of aerospace and defense companies climbed 22 percent.

Get More

• Lockheed’s costly F-35 to be billions costlier, Pentagon finds
• Company statement
• Additional details

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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