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August 10 Market Close: GovCon Index Falls on Orbital ATK Plunge After Accounting Disclosure

GovConIndexDOWNExecutive Mosaic’s GovCon Index recorded its worst session in four weeks Wednesday despite gainers as the clear majority after Orbital ATK (NYSE: OA) announced it would restate all financial results dated back to April 2014.

Shares in Orbital ATK plummeted 20.25 percent — or $17.987 — at the stock’s biggest one-day loss in nearly a year after the space systems and weapons maker disclosed the accounting review and said it will also delay the regulatory filing of second quarter results pending the audit.

Dulles, Virginia-based Orbital ATK said it misstated revenue and earnings figures from a potential 10-year, $2.3 billion contract to make ammunition at a U.S. Army plant in Missouri and now believes that program will be run at a net loss to the company for the full term.

Wednesday’s sharp fall puts Orbital ATK’s stock at a year-to-date decline of 2.27 percent compared to unchanged before markets opened Wednesday and a loss of 8.98 percent over 12 months versus the 14.14-percent gain for 52 weeks prior to the opening bell.

Vectrus declined 6.81 percent — or $2.26 — after the Colorado Springs-based government services contractor reported second quarter net income and revenue relatively flat from the prior year period despite a lift to 2016 guidance for earnings, sales and cash flow.

General Dynamics (NYSE: GD) was the GCI’s best net performer Wednesday after research firm Bernstein upgraded the defense contractor to “Outperform” from “Market Perform” and lifted the target stock price to $180 from $168.

Analysts at Bernstein view General Dynamics’ stock as at a discount compared to other large prime contractors since 2002 and project expansion in the company’s defense business on a rising U.S. military budget and increased demand from international allies.

Bernstein also views the company’s information systems and technology business segment as having “exceeded expectations.”

Falls Church, Virginia-based government technology services contractor CSRA (NYSE: CSRA) will report results for its first fiscal quarter after markets close.

Ten of the GCI’s 11 S&P 500-listed stocks posted gains with McKesson Corp. (NYSE: MCK) the lone lagger as U.S. stocks traded negative on declines by energy shares spurred by another fall in crude oil prices.

The S&P 500 composite index had its worst day in a week and the energy sector declined 1.5 percent as crude oil futures in New York settled down 2.48 percent to $41.71 after the Energy Information Administration said U.S. inventory added 1.1 million barrels last week.

Market Summary

Index Value Net Change % Change
GovCon Index 82.247 -0.513 -0.620%
S&P 500 2, 175.49 -6.25 -0.29%
Dow Jones Industrial Average 18, 495.66 -37.39 -0.20%
NASDAQ 5, 204.58 -20.90 -0.40%
Advancing GovCon Index Issues 20
Declining GovCon Index Issues 10
Unchanged GovCon Index Issues 0

Top GovCon Index Net Gainers

Symbol Company $ Current Price Net Change ▴ % Change
GD General Dynamics * 151.47 2.90 1.95%
SAIC Science Applications International Corp. 61.73 0.76 1.25%
BA Boeing * 132.28 0.75 0.57%
LLL L-3 Communications * 150.75 0.74 0.49%
CACI CACI International 96.37 0.67 0.70%

Top GovCon Index Percentage Gainers

Symbol Company $ Current Price Net Change % Change ▴
I Intelsat 2.67 0.08 3.09%
GD General Dynamics * 151.47 2.90 1.95%
CAE CAE 13.66 0.24 1.79%
CSRA CSRA 26.28 0.46 1.78%
SAIC Science Applications International Corp. 61.73 0.76 1.25%

* Also listed in the S&P 500 composite index

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