Zacks.com releases the latest Analyst Interview. Today’s interview is with senior analyst John Nelson Simon, who discusses General Dynamics (NYSE: GD), Force Protection (Nasdaq: FRPT), Lockheed Martin (NYSE: LMT), Oshkosh (NYSE: OSK) and Textron (NYSE: TXT).
A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.
What's the budget for the [newly developed MRAP] vehicles?
The Department of Defense (DoD) hopes to ultimately procure 15,374 MRAPs over the next three years, of which 7,774 have already been approved by the Joint Requirement Oversight Council. The estimated price tag for the 7,774 vehicles is $11.4 billion, but that could easily double if MRO (maintenance, repair and overhaul) is included in the estimate, for these vehicles operate on mean streets.
Nice business if you can get a piece of it. As for specific final numbers, that appears to be a moving target, for, at one point, the DoD was considering ordering 20,000 or so MRAPs. So far, the U.S. military has actually placed orders for 6,415 MRAPs.
Have they been performing well thus far in the field? What does the future hold for MRAP builders?
There are no simple answers to those questions. Since November 2006, we believe only 375 MRAPs have been delivered to the war zone, including, in the last few weeks, 42 of the 14-ton, four-wheel-drive Category I MRAPs and 13 of the 24-ton, six-wheel-drive Category II MRAPs. The expectation is that many more will be delivered by year-end.
However, the impetus to accelerate the delivery and transport of MRAPs to Iraq would be diminished if we commit to winding down our activities in that country, which may or may not happen in the next 12-14 months. Also, there is the issue of questions regarding the long-term viability of the MRAP program itself, particularly in light of a competing product: the JLTV.
So what is a JLTV?
Well, it’s the Joint Light Tactical Vehicle, which will encompass the latest technologies for fighting in the battlefield of the future. The armed services purportedly would like 40,000 of these critters at currently-estimated unit prices of between $180K and $450K; at a median price of $315K, that comes to $12.6 billion in current dollars. The probable contractors on this program -- so far -- are AM General, BAE Systems, General Dynamics (NYSE: GD), Force Protection (Nasdaq: FRPT), Lockheed Martin (NYSE: LMT), Oshkosh (NYSE: OSK), Protected Vehicles and Textron (NYSE: TXT).
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