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Lockheed Martin's Resilient Portfolio Praised By Argus

Lockheed Martin's Resilient Portfolio Praised By Argus - Lockheed Martin Corporation NYSE:LMT, Leidos Holdings NYSE:LDOS

Lockheed Martin Corporation LMT 0.99% commenced the exchange offer on July 11, 2016, for the split-off of its government IT infrastructure services business.

Argus’ John Eade maintains a Buy rating on the company, with a price target of $290.

The Split-Off

Lockheed Martin’s government IT infrastructure services business is to be merged with Leidos Holdings, Inc. LDOS 1.54%.

Lockheed Martin’s have the option to participate in the split-off, with the last date to tender shares being August 16, 2016.

“Leidos is a mid-cap defense company with a seasoned management team that may appeal to growth investors,” Eade mentioned.

Related Link: U.S. Air Force Says First Squadron Of Lockheed F-35 Fighter Jets Combat Ready

Shareholders who do not tender shares will continue to hold shares of the same company, although it would not include the split-off business.

The analyst believes that a lower share could might boost EPS.

Resilient Portfolio

According to the Argus report, “Lockheed has consistently surprised the Street in recent years in the face of budget-cutting headwinds. The company’s product portfolio has also been resilient amid reduced U.S. government spending, though growth in earnings has recently been driven by cost cuts, a pension plan restructuring, and share buybacks.”

In addition, government spending has begun to re-accelerate in recent quarters, which could boost earnings.

“We have a favorable view of the company’s focus on international revenue diversification, and expect increased geopolitical tension to benefit sales and earnings going forward,” Eade stated.

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DateFirmActionFromTo
May 2016BerenbergDowngradesBuyHold
May 2016RBC CapitalDowngradesOutperformSector Perform
May 2016Stifel NicolausDowngradesBuyHold

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