Lockheed Martin Corp. LMT recently secured a $492.1-million contract for High Mobility Artillery Rocket Systems (HIMARS) M142 launchers. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.
Per the terms, Lockheed Martin will also provide maintenance, training, qualification testing, software support and other services related to the M142 launchers. Work related to the deal will be performed in Camden, AZ; Boca Raton, FL; and other locations across the United States. The contract is scheduled to be completed by May 30, 2023.
A Brief Note on HIMARS
The HIMARS is the newest member in the Multiple Launch Rocket System (MLRS) family. It enables troops in engaging and defeating artillery, and air defense concentrations.
The rocket system carries a six-pack of GMLRS rockets or one TACMS missile, and is designed to launch the entire MLRS family of munitions. Additionally, it simplifies coalition operations, training, logistics and military coordination.
What Favors Lockheed Martin?
In recent times, the missile defense systems in the U.S. aerospace-defense market has gained significant traction. The traction is primarily attributable to the advancements and integration of new tactical features, followed by improved markets for missile systems, directed energy and anti-satellite weapons. Lockheed Martin, a prominent missile developer and Pentagon’s largest defense contractor, has been witnessing growing demand for missiles, resulting in a significantly higher inflow of contracts.
Interestingly, per Research and Markets, the global MLRS market value is projected to see a CAGR of 8.2% to $1.15 billion by 2026 from 2017. Such growth can be attributed to heavy and frequent investments made by countries like the United States, China, Russia and Israel in the development of next-generation missiles and missile defense systems along with the increase in artillery modernization programs and growing territorial disputes. These eventually fuel the global MLRS’ market growth.
Notably, these aforementioned developments and technical advancements will further lead to increasing demand for missiles, spare parts and technical services, thereby boosting growth prospects of defense contractors like Lockheed Martin in this market.
Shares of Lockheed Martin have gained 14.3% in the past 12 months compared with the industry’s growth of 3.8%.
Zacks Rank & Other Key Picks
Lockheed Martin currently sports a Zacks Rank #1 (Strong Buy).
A few other top-ranked stocks in the same sector are Heico Corporation HEI, Northrop Grumman Corp. NOC and Teledyne Technologies TDY. While Heico sports a Zacks Rank #1, Northrop Grumman and Teledyne carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Heico’s long-term growth estimates currently stand at 13.9%. It came up with an average positive earnings surprise of 9.47% in the last four quarters.
Northrop Grumman’s long-term growth estimates currently stand at 12.8%. It came up with an average positive earnings surprise of 18.5% in the last four quarters.
Teledyne’s long-term growth estimates currently stand at 7.5%. It came up with an average positive earnings surprise of 6.79% in the last four quarters.
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