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Lockheed Martin Corp.’s LMT business unit, Space Systems, recently clinched a modification contract for Trident II (D5) missile production and deployed systems support. Work related to the deal is scheduled to be completed by Sep 30, 2025.
Valued at $29.1 million, the contract was awarded by Strategic Systems Programs, located in Washington DC. Majority of the task will be completed in Denver, CO and Magna, UT.
The contract will cater to the U.S. Navy and the U.K. government.
Increasing importance of Missiles & Trident II
Of late, increasing geopolitical conflicts, war and terrorism across the globe have forced developing nations, the United States and other developed countries to significantly boost their missile strength. As a result, the United States — the largest provider of missile defense systems — is witnessing increased number of contracts from its government as well as allies for supplying combat proven missiles.
Notably, submarine-launched fleet ballistic missiles (SLBMs) form an integral part of the United States’ strategic nuclear deterrent Triad, with Trident II (D5) being the latest generation of SLBMs. Notably, it is equipped with multiple independently targetable re-entry vehicles (MIRV) and thermonuclear warheads. Since its design completion in 1989, Trident II (D5) has made 167 successful test launches — a record unmatched by any other large ballistic missile or space launch vehicle.
This positions Lockheed Martin, which is Trident’s primary contractor, in a comparatively advantageous spot when it comes to the U.S. Navy’s preferred missile programs. The latest contract win is a bright example of that.
The global rocket and missile market, which also includes fleet ballistic missiles, is projected to witness CAGR of 4.7% during the 2017-2022 period to reach a value of $70 billion by 2022 (per a report by Markets and Markets research firm).
With the United States being one of the key players in the global missile market, such projections indicate a golden era for the nation’s premier missile defense providers like Lockheed, Raytheon Technologies RTX, Northrop Grumman NOC and Boeing BA.
As far as these stocks’ prospects within the nation are concerned, it is imperative to mention that the U.S. government’s fiscal 2021 defense budget includes a significant spending plan of $13.6 billion on missile defense, 126.6% higher than the previous budget plan. Such an increased spending provision should usher in more contracts for the nation’s varied range of missile programs like the latest one.
Price Movement and Zacks Rank
Shares of Lockheed, a Zacks Rank #3 (Hold) company, have lost 6.5% in the past year compared with the industry’s decline of 23.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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