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Lockheed Gets PAC-3 Missile Contract

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Lockheed Martin Corp. (LMT) received a contract worth $308 million from the U.S. Army Aviation and Missile Command for the sale of missiles to Kuwait. Per the contract, the company will provide hardware and services related to the combat-proven PATRIOT Advanced Capability-3 (PAC-3) Missile Segment program.

Specifically, the contract calls for the production of 244 hit-to-kill PAC-3 Missiles, 72 launcher modification kits and associated tooling, as well as program management.

Lockheed Martin manufactures combat-proven PAC-3 missiles under production contracts from the U.S. Army, Air and Missile Defense Program. The PAC-3 Missile is the most advanced and powerful terminal air defense missile. Lockheed Martin is the prime contractor on the PAC-3 Missile Segment upgrade to the PATRIOT air defense system.

The missile segment consists of the PAC-3 Missile, a highly agile hit-to-kill interceptor, the PAC-3 Missile canisters, a fire solution computer and an enhanced launcher electronics system and launcher support hardware.

This is the first PAC-3 Patriot variant sale by Lockheed Martin to Kuwait under a Foreign Military Sale program. This makes Kuwait the sixth international customer for the missile. Other international customers include Germany, Japan, the Netherlands, Taiwan, and the United Arab Emirates.

Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT programs. During second quarter of 2013, the company’s Missiles and Fire Control segment quarterly sales increased 10.9% year over year driven by higher volume for tactical missile programs, primarily PAC-3 and Terminal High Altitude Area Defense (:THAAD).

We expect the company to continue to benefit from a strong defense focus on a number of its platform programs, such as the C-130 Hercules & C-5 Galaxy transport aircrafts, F-16 Fighting Falcon multi-role jet, MH-60 Helicopters, the Advanced Extremely High Frequency & the Global Positioning Satellite III system satellites, the Littoral Combat Ship, the Aegis Weapons System for mobile and sea-based missile defense and the THAAD system. The company presently retains a short-term Zacks Rank #2 (Buy).

Among the stocks worth considering in the space are Huntington Ingalls Industries, Inc. (HII), Northrop Grumman Corp. (NOC) and Raytheon Company (RTN). While Raytheon carries a Zacks Rank #1 (Strong Buy), Huntington Ingalls and Northrop Grumman hold a Zacks Rank #2 (Buy).

Read the Full Research Report on NOC

Read the Full Research Report on RTN

Read the Full Research Report on LMT

Read the Full Research Report on HII

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