Truist estimates NGAD program would have $4B-$5B value to Lockheed

Truist notes that on Friday morning, the White House announced Boeing (BA) as the winner of the Next Generation Air Dominance contract for the U.S. Air Force. Boeing and Lockheed Martin (LMT) were the two companies under consideration for the more than $20B estimated contract for engineering and development alone. NGAD will replace Lockheed’s F-22 Raptor and will be a crewed aircraft capable of working alongside drones with advanced sensor and stealth capabilities. Following the announcement, Lockheed’s stock is down about 6% on the loss of the potential multi-billion-dollar contract. While still early in the process, Truist estimates that the NGAD program, assuming smooth execution, while progressing through the learning curve, would have roughly $4B-$5B value to Lockheed when discounted back over a 20-year period. The firm has a Buy rating on Lockheed with a price target of $579.