Lockheed (LMT) Secures a $194M Deal to Aid Missile Flight Testing
Lockheed Martin Corp.’s LMT Space business unit recently clinched a modification contract involving support for a missile flight test. The award has been offered by the Strategic Systems Programs, Washington, D.C.
Details of the Deal
Valued at $193.8 million, the contract is expected to be completed by Feb 25, 2025. Per the terms of the deal, Lockheed will provide design, development, build, and integration of equipment for missile flight test demonstrations and fielding.
A major portion of the work related to this contract will be carried out in Littleton, CO.
What’s Favoring Lockheed?
Increasing geopolitical and socioeconomic turmoil worldwide has prompted nations, both developed and developing, to expand their respective military arsenal, with missiles constituting a significant portion of that inventory.
Notably, Lockheed’s Space business unit, apart from developing satellites and space transportation systems, also builds strike missiles as well as missile defense systems. Its major programs include Trident II D5 Fleet Ballistic Missile, the one with the U.S. Navy for the only submarine-launched intercontinental ballistic missile currently in production in the United States. The unit also designs Next Generation Interceptor, a program with the Missile Defense Agency, utilizing next-generation propulsion and sensors to provide homeland missile defense. The Space unit’s portfolio also includes Next Generation Overhead Persistent Infrared (Next Gen OPIR) system, which provides the U.S. Space Force with enhanced worldwide missile warning capabilities.
As one of the major missile makers in the United States and with such remarkable missile and missile warning systems in its product portfolio, Lockheed enjoys a strong demand base in the missile defense market. The latest contract win is a bright example of that.
Growth Prospects
Per a report from the Mordor Intelligence firm, the missiles and missile defense system market is anticipated to witness a CAGR of 4.8% during the 2024-2029 period. Such an expanding market is likely to benefit LMT as it enjoys a solid position in the military missile market.
Some other prominent defense majors that have a strong position in the missile and associated parts manufacturing industry and are thus also likely to enjoy the perks of the expanding missile defense market have been discussed below.
Northrop Grumman NOC is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. To strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air, sea and land-based systems.
The company has a long-term earnings growth rate of 3%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates an improvement of 4.4% from the 2023 reported figure.
RTX Technologies’ RTX Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. The unit serves as a prime contractor or major subcontractor on numerous missiles and related programs with the U.S. Department of Defense.
RTX’s long-term earnings growth rate is 10.2%. The Zacks Consensus Estimate for RTX’s 2024 sales indicates an improvement of 5.7% from the 2023 reported figure.
General Dynamics’ GD Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.
General Dynamics boasts a long-term earnings growth rate of 10.8%. The Zacks Consensus Estimate for GD’s 2024 sales indicates an improvement of 8.4% from the 2023 reported figure.
Price Movement
In the past year, shares of Lockheed have lost 11.4% compared with the industry’s decline of 12.2%.
Image Source: Zacks Investment Research
Zacks Rank
Lockheed currently carries a Zacks Rank #4 (Sell).
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