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September 22 Market Close: GovCon Index Extends Post-Fed Rate Decision Gains, KBR Joins GCI After Govt Services Acquisitions

GovConIndexUPExecutive Mosaic’s GovCon Index rose for a second straight session Thursday to extend gains on the Federal Reserve‘s Wednesday decision to leave interest rates unchanged on a mix of contributions from large defense platform makers and services-oriented contractors.

Thursday also represented the GovCon Index’s first day of activity with KBR (NYSE: KBR) as a listed company in light of the Houston-based company’s $870 million in acquisitions of government contractors this year: the $570 million purchase of Wyle in July and $300 million pickup of the former Honeywell (NYSE: HON) government services business that closed on Monday.

KBR — which replaced Intelsat (NYSE: I) on the GCI — expects its renamed “KBRWyle” global government services segment to generate $2.5 billion in annual revenue and represent close to 41 percent of total company sales per year, while the global engineering contractor holds a total market capitalization of $2.11 billion as of Thursday’s close.

Shares in KBR have declined 16.19 percent year-to-date and 12.31 percent over 12 months but the stock has added 3.92 percent since the Wyle transaction’s original May 23 announcement.

The substitution of KBR for Intelsat represented a positive impact on the GCI of 0.404 points excluding market conditions in a day of across-the-board gains for U.S. stocks as investors continued to welcome and also process the Fed’s monetary policy decision.

Every GovCon Index company except one closed higher Thursday and all 11 of the GCI’s S&P 500 stocks registered gains with Lockheed Martin (NYSE: LMT) the top net advancer for shares included in both indices.

Four of the GCI’s 10 net leaders in Thursday trade are S&P 500 companies.

Huntington Ingalls Industries (NYSE: HII) led all GovCon Index net advancers to extend the military shipbuilder’s rally into a second straight session in a September that has seen the stock tumble as low as 15 percent on a month-to-date basis.

CACI International (NYSE: CACI) ended Thursday as second for GCI net gainers and was followed by Lockheed, Science Applications International Corp. (NYSE: SAIC) and pharmaceutical services provider General Dynamics (NYSE: GD).

Lockheed’s stock climbed after the defense contractor added $2 billion to its current stock repurchase program that now totals $4.3 billion with this increase as the company continues on its target to bring its outstanding share count below 300 million by 2017.

Shares in the F-35 maker are down 7.46 percent since the spinout and merger of the government services business into Leidos Holdings (NYSE: LDOS) on Aug. 16, when Lockheed said its share buybacks related to that transaction were short of guidance to investors.

General Dynamics hit its highest-ever closing price after the Senate voted Wednesday to move Saudi Arabia’s $1.15 billion purchase of company-made Abrams tanks and other ground vehicles forward, per a Reuters report.

Navistar International (NYSE: NAV) was the lone GCI lagger at a decline of 1.2 percent to end the armored truck maker’s streak of six consecutive gains after UBS lifted its price target on the armored truck manufacturer.

Investors also digested economic data that showed existing home sales declined in August compared to economists’ expectations of an increase and weekly jobless claims hit a two-month low, CNBC reported.

Market Summary

Index Value Net Change % Change
GovCon Index 81.780 +1.439 +1.791%
S&P 500 2, 177.18 +14.06 +0.65%
Dow Jones Industrial Average 18, 392.46 +98.76 +0.54%
NASDAQ 5, 339.52 +44.34 +0.84%
Advancing GovCon Index Issues 29
Declining GovCon Index Issues 1
Unchanged GovCon Index Issues 0

Top GovCon Index Net Performers

Symbol Company $ Current Price Net Change ▴ % Change
HII Huntington Ingalls Industries 154.03 +3.98 +2.65%
CACI CACI International 103.16 +3.55 +3.56%
LMT Lockheed Martin * 246.62 +2.80 +1.15%
SAIC SAIC 70.62 +2.18 +3.19%
GD General Dynamics * 154.86 +1.76 +1.15%

Top GovCon Index Percentage Performers

Symbol Company $ Current Price Net Change % Change ▴
CACI CACI International 103.16 +3.55 +3.56%
ICFI ICF 45.40 +1.46 +3.32%
SAIC SAIC 70.62 +2.18 +3.19%
KBR KBR 14.82 +0.39 +2.70%
HII Huntington Ingalls Industries 154.03 +3.98 +2.65%

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