Archer Aviation Inc. ACHR and Anduril Industries Inc. recently entered into an exclusive partnership to develop a next-generation hybrid vertical take-off and landing (VTOL) aircraft for defense applications. The partnership aims to secure a potential project with the U.S. Department of Defense and provide innovative, cost-effective solutions for national security.
Benefits of ACHR’s Partnership
Archer Aviation’s expertise lies in rapidly developing advanced VTOL aircraft by utilizing existing commercial parts and well-established supply chains. This approach enables faster production and cost efficiency.
Anduril Industries excels in Artificial Intelligence, mission planning and systems integration, bringing cutting-edge technology and innovation to the table.
The combination of Archer Aviation’s speed and cost-effective development process with Anduril’s advanced technological capabilities should enable the partnership to deliver critical hybrid VTOL solutions more quickly and at a lower cost than traditional methods.
ACHR’s Financing for the Deal
This project is part of Archer Aviation’s new Archer Defense program. To support this and other business needs, the company raised $430 million in funding through additional equity capital. The key investors include Stellantis, United Airlines, Wellington Management and Abu Dhabi’s 2PointZero.
Partnerships on the Rise
Rising military conflicts, terrorism and border disputes have pushed nations to prioritize national security, especially by enhancing their defense capabilities. This has driven defense companies to join forces through partnerships and joint ventures to create innovative products like advanced fighter jets and hybrid aircraft. By combining resources and expertise, these companies can develop solutions with improved speed, agility and combat efficiency to meet the growing complexity of modern warfare.
Other defense companies that are entering into partnerships and joint ventures are discussed below.
Lockheed Martin Corporation LMT: In September 2024, Lockheed Martin and Tata Advanced Systems Limited entered into a teaming agreement to expand upon the companies' business relationship through the C-130J Super Hercules tactical airlifter. The deal includes plans to set up a Maintenance, Repair and Overhaul facility in India to support the Indian Air Force’s fleet of 12 C-130Js and other global Super Hercules aircraft.
LMT has a long-term earnings growth rate of 4.5%. The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.5%.
Northrop Grumman Corporation NOC: In September 2024, Northrop Grumman signed a Memorandum of Understanding ("MOU") with Lithuania's Ministry of Defence and Ministry of Finance to collaborate on helping Lithuanian industry produce medium-caliber ammunition for Infantry Fighting Vehicles. The agreement allows Northrop Grumman to share technology and manufacturing expertise with the Lithuanian industry, in line with U.S. policy.
NOC has a long-term earnings growth rate of 19.1%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates year-over-year growth of 5.3%.
BAE Systems BAESY: In December 2024, BAE Systems, Leonardo and Japan Aircraft Industrial Enhancement Co Ltd (“JAIEC”) reached an agreement to form a new company under a business joint venture for the Global Combat Air Programme. The new joint venture will be responsible for designing, developing and delivering the next-generation combat aircraft. It will oversee the aircraft's design throughout its lifecycle, which is expected to extend beyond 2070.
BAESY has a long-term earnings growth rate of 11.1%. The Zacks Consensus Estimate for BAESY’s 2024 sales indicates year-over-year growth of 37.7%.
ACHR Stock’s Price Movement
Shares of ACHR have gained 189.8% in the past three months against the industry’s 9.3% decline.
Image Source: Zacks Investment Research
ACHR’s Zacks Rank
ACHR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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