Canada picked Lockheed Martin (LMT) as the favorite bidder to supply it with dozens of modern fighter jets, according to a Reuters report citing government officials.
Canada is looking to purchase 88 new fighter jets for its military. Several defense suppliers, including Boeing (BA) and Sweden’s Saab, bid for the contract, along with Lockheed Martin. The country’s Procurement Minister Filomena Tassi has said they prefer Lockheed Martin’s F-35 jets to replace the ageing CF-18 fighter jets they have been using. The contract could be worth as much as $15.1 billion.
Canada’s Defense Minister Anita Anand, said, “The F-35 is in operational use by NORAD and NATO partners in missions around the globe. It has proven to be a mature, capable and interoperable aircraft and that is why we are moving to the finalization phase of this procurement.”
Fighter Jet Purchase Decision More Than a Decade in the Making
If Canada and Lockheed Martin agree on the deal, then the contract is expected to be awarded this year, with Canada expecting to take first deliveries in 2025. However, if talks with Lockheed Martin fail, Canada would turn to Sweden’s Saab. Meanwhile, Boeing was dropped from competition last year.
It has taken Canada more than a decade to make the decision on acquiring modern fighter jets for its Air Force. In 2010, the country’s Conservative administration at the time planned to buy 65 jets of the F-35 type from Lockheed Martin but later dropped the plan.
Although Prime Minister Justin Trudeau was against buying F-35s when he came to power, his Liberal government later decided to run a competitive bidding process for the jet supply contract, according to the Associated Press.
Wall Street’s Take
The Street is cautiously optimistic about Lockheed Martin stock, with a Moderate Buy consensus rating based on seven Buys versus eight Holds. The average Lockheed Martin price target of $457.87 implies 2.9% upside potential to current levels. LMT shares have gained 26% year-to-date.
Blogger Opinions
TipRanks data shows that financial blogger opinions are 98% Bullish on LMT, compared to a sector average of 69%.
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