Market Overview

Defense Shares Diverging On Mixed Outlooks

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Two big defense contractors' shares headed in opposite directions Thursday on diverging earnings outlooks.

Northrop Grumman Corporation (NYSE: NOC) gained more than 2.5 percent recently, changing hands at $156.14, after the company forecast 2015 earnings about 3 percent higher than the Wall Street consensus.

But Raytheon Company (NYSE: RTN) plunged more than 5 percent, to $98.57 recently, after telling investors that full-year earnings will be about 9 percent below the current Street view.

Meanwhile, the smaller aerospace and national security contractor L-3 Communications Holdings Inc. (NYSE: LLL) was off about 1 percent recently, after posting a disappointing revenue outlook Wednesday.

Earlier this week General Dynamics Corporation (NYSE: GD) and Lockheed Martin Corporation (NYSE: LMT) offered disappointing outlooks.

U.S. Defense spending is off about 17 percent from a 2010 peak, although the Pentagon is set to request a $534 billion 2015 budget that would be its largest in history.

Raytheon called 2015 "a transition year" as the company boosts spending on research and development and books higher costs for initial production on new projects.

Northrop is competing with Lockheed Martin and Boeing Co (NYSE: BA) for a contract to build a next-generation strategic bomber that could be worth $55 billion.

L-3 beat earnings expectations for its recent fourth-quarter when it won key contracts with the U.S. Army, the National Security Agency and the United Nations.

But the company forecast 2015 earnings between $7.35 and $7.65 a share, on revenue of $11.75 billion to $11.95 billion.

Wall Street had predicted earnings of $7.49 a share on revenue of $12.07 billion.

Posted-In: Earnings News Guidance Intraday Update

 

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