A decision to ramp up production on the Lockheed Martin (LMT) F-35 has reportedly been postponed indefinitely. Lockheed stock rose.
The latest delay stems from continued problems with simulation technology needed to conduct the most rigorous combat testing on the stealth fighter. The testing is required before the $400 billion F-35 program can proceed to full-rate production.
A spokesperson for Pentagon acquisition chief Ellen Lord told Bloomberg that “technical challenges and the impact of Covid-19” have delayed simulator preparations.
The simulator testing was originally scheduled to start in 2017 but slipped to December 2020 and then to March 2021. Now a new target date will come after “an independent technical review,” the acquisition office said.
In a separate report due in January, the Pentagon’s chief weapons evaluator is expected to estimate that the testing may not occur until mid- to late-2021, according to Bloomberg.
Shares rose 0.4% to 355.44 on the stock market today. Lockheed stock is forming a flat base with a 402.48 entry point, according to MarketSmith analysis. Top F-35 subcontractor Northrop Grumman (NOC) edged up 0.2%, and engine supplier Raytheon Technologies (RTX) added 0.1%.
When the F-35 eventually does get the full-rate green light, production is expected to ramp up to 170 by 2022 from 123 in 2020.
The fighter accounts for the bulk of the company’s revenue, and continued delays will likely weigh on earnings and Lockheed stock.
Still, the F-35 remains in high demand overseas, especially among U.S. allies in the Mideast. But some are also evaluating possible purchases of Boeing (BA) fighter jets as well.
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