Lockheed's (LMT) Unit Wins $28M Contract to Upgrade MH-60R/S
Lockheed Martin Corp.’s LMT business segment, Rotary and Mission Systems ("RMS"), recently secured a contract to procure mission computers and flight management computers retrofit kits for upgrading the MH-60R/S helicopters. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $28 million, the contract is expected to be completed by March 2024. Per the terms of the deal, the RMS unit will also supply 153 wiring kits for MH-60R/S helicopters. The contract will cater to the U.S. Navy, Australia, Denmark and Saudi Arabia.
Majority of work related to the deal will be carried out in Owego, NY.
Significance of MH-60R/S
Lockheed’s MH-60R is a naval helicopter designed to operate from frigates, destroyers, cruisers and aircraft carriers. It is currently used by the U.S. Navy as its primary anti-submarine warfare anti-surface weapon system for open ocean and littoral zones.
Apart from the U.S. Navy, the naval forces of Denmark, Australia and Saudi Arabia have already added this advanced maritime helicopter to their fleets. In 2020, India and Greece were the latest countries to add the MH-60R to their fleets. Of late, in April 2021, Korea became the seventh nation to add this combat-proven helicopter to its fleet. This evidently reflects the growing demand of MH-60R/S helicopters.
Currently, more than 300 of MH-60R/S helicopters are in operation worldwide. Given the growing demand for this aircraft, we can expect this number to increase along with enhanced flow of contracts related to MH-60R/S production and associated upgrades. The latest contract win is a bright instance of the same.
Growth Prospects
Per Mordor Intelligence, the global military rotorcraft market is projected to witness a CAGR of more than 3% during 2020-2025 time period. Widespread political unrest and cross-border tensions are expected to fuel the demand for such combat helicopters, thereby setting the stage for helicopter manufacturers like Lockheed to gain increased traction in this market.
The aforementioned market growth projection should also bode well for other combat helicopter makers like Boeing BA, Airbus SE EADSY and Textron TXT.
Price Performance and Zacks Rank
In the past six months, shares of Lockheed, a Zacks Rank #2 (Buy) company, have gained 12.5%, underperforming the industry’s 14.7% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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