{"id":58108,"date":"2023-09-07T12:38:35","date_gmt":"2023-09-07T16:38:35","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/lockheed-cuts-f-35-guidance-the-stock-fell\/"},"modified":"2023-09-07T12:38:38","modified_gmt":"2023-09-07T16:38:38","slug":"lockheed-cuts-f-35-guidance-the-stock-fell","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=58108","title":{"rendered":"Lockheed Cuts F-35 Guidance. The Stock Fell."},"content":{"rendered":"
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Shares of
\n Lockheed Martin
\n took it on the chin after management said the aerospace company isn\u2019t going to deliver as many F-35 fighter jets in 2023 as it had expected. That means less free cash flow, but there is a silver lining for investors. <\/p>\n

Wednesday, Lockheed (ticker: LMT) said it now expects to hand 97 F-35s over to customers in 2023, while management had said on a call to discuss its second-quarter results that it expected to deliver 100 to 125. In 2022, F-35 deliveries came in at 141, a bit below the roughly 150 F-35s Lockheed typically delivers each year. <\/p>\n

\n

All of the jets will be in the so-called Technology Refresh 2, or TR-2, configuration. Technology Refresh 3, or TR-3, is an updated version that is now being tested. Deliveries of those planes will start later than anticipated. <\/p>\n

\u201cThe Pentagon [in July] stopped accepting F-35 aircraft fitted with Technology Refresh 3 upgrades until testing of the TR-3 capability is completed,\u201d wrote\u00a0Morgan Stanley\u00a0analyst\u00a0Kristine Liwag\u00a0in a research report before Lockheed offered its update. \u201cWe estimate that a shortage of about 55 aircraft deliveries versus Lockheed\u2019s earlier 147 to 153 target could drive a [roughly] $440 million headwind to 2023 free cash flow.\u201d<\/p>\n

Given that Lockheed now expects to deliver 97 jets in 2023, Liwag\u2019s call was quite a prediction. The first jets with TR-3 upgrades are now slated to be delivered between April and June 2024. <\/p>\n

Lockheed stock dropped about 4.6% in Wednesday\u2019s trading, while the
\n S&P 500
\n and
\n Dow Jones Industrial Average
\n fell about 0.8% and 0.6%, respectively. Other aerospace supplier stocks fell as well because fewer deliveries mean less need for components. Shares of
\n RTX
\n (RTX) which makes the F-35 engines, fell about 1.6%. <\/p>\n

Delays have \u201cbeen in the works for a while,\u2019 said Vertical Research Partners analyst Rob Stallard. His estimated hit to 2023 free cash flow is about $350 million. <\/p>\n

Wall Street currently projects about $6.2 billion in free cash flow generated in 2023, so the F-35 delay is putting roughly 6% of that at risk. The stock\u2019s decline of nearly 5% more or less matches that, but investors should remember that Lockheed is still going to produce and sell the jets that dropped off the roster this year.<\/p>\n

The sales volume and associated free cash flow should only shift from 2023 into 2024 and beyond. <\/p>\n

Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Shares of Lockheed Martin took it on the chin after management said the aerospace company isn\u2019t going to deliver as many F-35 fighter jets in 2023 as it had expected. That means less free cash flow, but there is a silver lining for investors. Wednesday, Lockheed (ticker: LMT) said it now expects to hand 97 […]<\/p>\n","protected":false},"author":1,"featured_media":58109,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-58108","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nLockheed Cuts F-35 Guidance. 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