Lockheed (LMT) Wins Deal to Support Missile Programs for Navy

Lockheed Martin Corp.’s LMT business unit, Missile and Fire Control, recently won a contract involving Long Range Anti-Ship Missile (LRASM) along with some other missile programs. The Naval Air Systems Command, Patuxent River, MD has offered the award.

Details of the Deal

Valued at $32 million, this contract is projected to get completed by July 2024. Per the terms, Lockheed will engage in LRASM AGM-158C-2 development, integration, and testing to support combined Anti-Surface Warfare, LRASM, and Joint Air-to-Surface Standoff Missile (JASSM) strike capability for the U.S. Navy.

The majority of the work related to this deal will be executed in Orlando, FL.

What’s Favoring Lockheed Martin?

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.

Lockheed’s Missiles and Fire Control business unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile, Terminal High Altitude Area Defense missile, JASSM, LRASM and many more.

Lockheed frequently wins contracts from Pentagon and other U.S. allies involving its variant missile programs, like the latest one, boosting its revenue growth.

Growth Prospects

The global rockets and missiles market, valued at $58.3 billion in 2021, is projected to witness a CAGR of 4.8%, to reach $73.8 billion by 2026, per a report by Markets and Markets.

Such projections reflect increased growth opportunities for major missile players like Lockheed Martin, Raytheon RTX, Northrop Grumman NOC and Boeing BA in the aforementioned market.

Notably, Raytheon offers a variety of combat-proven missile defense systems, including the Patriot missile, Standard Missile-6, Standard Missile-3, Advanced Medium-Range Air-to-Air Missile, Evolved Seasparrow Missile, Tomahawk cruise missile and a few more.

Raytheon boasts a long-term earnings growth rate of 10.2%. The Zacks Consensus Estimate for its 2022 earnings implies an improvement of 12.2% from the 2021 reported figure.

Northrop manufactures a variety of air-, sea- and land-based missile systems propulsion control systems that support the U.S. Missile Defense Agency (MDA). It also produces airborne missile warning systems as well as medium-class solid rocket motors for the U.S. Navy's Trident II Fleet Ballistic Missile program.

Northrop boasts a long-term earnings growth rate of 6.2%. The Zacks Consensus Estimate for its 2022 sales suggests an improvement of 2.6% from the 2021 reported figure.

Boeing’s missile defense capabilities provide defensive and strategic systems that protect the homeland and deployed forces. The company’s systems within the Integrated Air & Missile Defense portfolio include Arrow 3, which offers regional missile defense capabilities to enable an effective response to short and medium-range ballistic missiles.

BA boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for its 2022 earnings suggests an improvement of 137.2% from the 2021 reported figure.

Price Movement and Zacks Rank

Shares of Lockheed have gained 11.6% in the past year against the industry's decline of 42.1%.

Image Source: Zacks Investment Research

The company 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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