July 19 Market Close: GovCon Index Flat, Lockheed Gains on 2Q Beat Despite F-35 & Profit Caution

GovConIndexUPExecutive Mosaic’s GovCon Index scored a gain in choppy trade Tuesday on help from defense prime stocks such as Lockheed Martin (NYSE: LMT), which posted second quarter earnings and sales above analyst expectations but issued some caution to analysts on future earnings and the F-35 program.

The GovCon Index closed up 81.865 points to 0.279 and the S&P 500 that contains 11 GCI stocks posted a nominal decline to represent a continued slowdown from the post-Brexit rally amid mixed earnings reports.

Shares in Lockheed peaked at a gain of 1.73 percent in morning and reached a new 52-week high on its second quarter beats before the stock pared in afternoon trade and briefly hit negative after investors took note of warnings in a conference call with executives that the company needs a new contract from the Defense Department to sustain current F-35 production levels.

Lockheed is negotiating a new contract with DoD for F-35 lots nine and 10 and executives also told investors any share repurchases related to merger of its information systems and global solutions segment into Leidos Holdings (NYSE: LDOS) and the exchange offer for shareholders to own stock in Leidos post-combination may not equate to earnings neutral.

Leidos fell 39 cents — or 0.8 percent — Tuesday and that stock has declined 9.45 percent since the Jan. 26 announcement of its merger into IS&GS.

Large defense prime contractors and platform makers led GovCon Index gainers after Lockheed released second quarter results as Boeing (NYSE: BA), General Dynamics (NYSE: GD) and Northrop Grumman (NYSE: NOC) will report next week along with Raytheon (NYSE: RTN).

Raytheon’s stock closed down a nominal 3 cents and Northrop reached a new 52-week high as did L-3 Communications (NYSE: LLL).

Top GovCon Index Net Gainers

Symbol Company $ Current Price Net Change ▴ % Change
LMT Lockheed Martin * 258.96 2.67 1.04%
GD General Dynamics * 143.31 2.31 1.64%
OA Orbital ATK 87.60 1.45 1.68%
BA Boeing * 134.66 1.23 0.92%
NOC Northrop Grumman * 221.55 0.74 0.34%

Top GovCon Index Percentage Gainers

Symbol Company $ Current Price Net Change % Change ▴
OA Orbital ATK 87.60 1.45 1.68%
VEC Vectrus 31.11 0.51 1.67%
GD General Dynamics * 143.31 2.31 1.64%
LMT Lockheed Martin * 258.96 2.67 1.04%
BA Boeing * 134.66 1.23 0.92%

*Also listed in the S&P 500 composite index

Market Summary

Advancing GovCon Index Issues 17
Declining GovCon Index Issues 12
Unchanged GovCon Index Issues 1
Index Value Net Change % Change
GovCon Index 81.865 +0.279 +0.342%
S&P 500 2, 163.78 -3.11 -0.14%
Dow Jones Industrial Average 18, 539.01 +25.96 +0.14%
NASDAQ 5, 036.37 -19.41 -0.38%

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