General Dynamics Secures $1.22B US Army Order

General Dynamics’ subsidiary has secured a $1.22 billion hybrid contract to produce, test and deliver Interim Maneuver Short Range Air Defense (or IM-SHORAD) systems. The US Defense Department stated that the estimated completion date for the contract is Sept. 30, 2025.

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According to Defense News, the initial order for the contract, worth $230 million, to be delivered by General Dynamics’ (GD) subsidiary General Dynamics Land Systems (GDLS) is for 28 vehicles. The company has already started ordering the material and laying out production for the initial order.

GDLS told Defense News that the first vehicle under this contract will be rolled out in about 18 months and the first platoon will be ready in March 2021. The first battalion of 32 vehicles will be fielded in September 2021 and the second battalion in 2022. (See GD stock analysis on TipRanks)

On Thursday, Barclays analyst David E. Strauss lowered GD’s price target to $165 from $170 citing the underperformance of defense stocks since their peak in early 2018.

The analyst, maintained a Buy rating, noting that the shares are “mostly reflecting” key concerns including high budget risk, election and the decelerating outlays growth. “Further relative downside from here is limited and the group is most likely to outperform around the election,” he added.

The Street’s Hold consensus is based on 3 Buys, 4 Holds and 2 Sells. The average analyst price target of $160 implies upside potential of about 15.8%. Shares have declined 21.6% year-to-date.