Lockheed Martin's Resilient Portfolio Praised By Argus

Lockheed Martin Corporation LMT 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.

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.

Full ratings data available on Benzinga Pro.