NEW YORK (TheStreet) -- Shares of Lockheed Martin (LMT) were increasing in mid-morning trading on Friday as the global security and aerospace company has a disagreement with the Pentagon over a $6.1 billion contract for 57 of its F-35 fighter planes.
After months of contract negotiations, the Pentagon decided to split a combined deal for 160 jets covering two years of production and utilized a rarely used provision Wednesday that allowed it to unilaterally impose the contract and set the price, according to the Washington Post.
Lockheed said in a statement late Wednesday that the deal was not "mutually agreed upon" and that it plans to evaluate its options, which could include a court appeal, the Wall Street Journal reports.
The deal was a 3.7% price decrease from the last order of F-35s that the Pentagon purchased.
The Pentagon's decision could depress Lockheed's profits, as the F-35 makes up 23% of Bethesda, MD-based Lockheed's revenue, the Journal noted.
The F-35 is expected to account for as much as 25% of the company's revenue by next year.
(Lockheed Martin is a holding in David Peltier's Dividend Stock Advisor.)
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
The team rates Lockheed Martin as a Buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, compelling growth in net income and impressive record of earnings per share growth. The team feels its strengths outweigh the fact that the company has had generally high debt management risk by most measures that it evaluated.