By Pratyush Thakur and Mike Stone
(Reuters) -U.S. defense company Lockheed Martin (NYSE:LMT) raised its annual sales target on Tuesday, following the unexpected resumption of deliveries of its F-35 aircraft after the Pentagon began accepting the jets last week.
It expects 2024 sales to be between $70.5 billion and $71.5 billion, versus $68.5 billion to $70 billion forecast earlier.
Shares of the Bethesda, Maryland-based company were up 3.2% in morning trade.
The U.S. resumed taking F-35 deliveries after a months-long pause on delays on its software upgrade. Lockheed has been upgrading the jets under Technology Refresh 3, or TR-3 program, that gives the F-35 better displays and processing power.
The delivery resumption includes incomplete software upgrades and Pentagon will withhold some payment, the details of which is unknown, until the remaining enhancements are finished.
Lockheed's F-35 is the world's largest defense program and contributes around 30% of the company's revenue.
"The F-35 remains a top priority, and we recently delivered the first TR-3-configured aircraft to the customer and anticipate deliveries for 2024 to meet our expected range of 75-110 F-35s," said CEO Jim Taiclet.
TR-3 involves both hardware and software improvements and is seen as a pillar of a wider upgrade to the stealth jet known as Block 4.
The enhancements "are critical steps in ensuring the F-35 remains the most advanced fighter aircraft in the world and the key air vehicle node in the DoD's joint all domain architecture", Taiclet said.
Lockheed, however, does not expect the full tech refresh package to be ready for months.
Lockheed's second-quarter net income of $6.85 per share beat LSEG estimates of $6.46 per share. Total quarterly sales rose 8.5% to $18.12 billion, also above the $17.04 billion estimated.
"Beat in revenues was around $1.1 billion, but guidance was only raised by $1.5-2.0 billion, suggesting that Q2 benefited from some timing issues which changed the expected quarterly pattern Lockheed had set out previously," Panmure Liberum and Agency Partners LLP note said.
Three months back, Congress approved $95 billion in additional funding as aid to Ukraine and Israel, driving Lockheed's earnings beat.
Combat in Ukraine and Israel has consumed high volumes of munitions, including Lockheed-made Patriot air defense interceptors, used to shoot down incoming hostile missiles.