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Oshkosh (New York Stock Exchange: OSK) closed -10.8% in Friday trading in its biggest single-day drop since 2014 after the unexpected loss of an $8.6 billion US military contract.
The Army awarded competitor AM General the contract to build more than 20,000 Joint Light Tactical Vehicles and nearly 10,000 trailers spanning five base years plus five optional one-year periods.
AM General had lost to Oshkosh (OSK) in the original 2015 competition to build the JLTV, replacing part of the aging Humvee fleet.
Oshkosh (OSK) has built almost 19,000 JLTVs to date, supplying all four US service branches, as well as the militaries of Montenegro, Brazil, Slovenia and Lithuania.
Jefferies analyst Stephen Volkmann estimates that the loss of the JLTV contract will wipe out $1 billion of potential annual revenue from 2025, “or half of OSK’s Defense segment and ~12% of our total revenue ( estimates) by 2023,” according to Bloomberg.
Oshkosh (OSK) was already struggling with multiple operational challenges, leading to weak on-time deliveries and lower-than-expected profits, Stephen Simpson writes in an analysis recently published in Seeking Alpha.
