Lockheed Martin Corp. LMT recently clinched a contract to provide technical assistance support for the Phased Array Tracking Radar to Intercept on Target (PATRIOT) Advanced Capability-3 (PAC-3) missiles. The award has been offered by the U.S. Army Contracting Command, Redstone Arsenal, AL.
The contract, valued at $129.7 million, is expected to be completed by Nov. 30, 2027. Work related to this deal will be carried out in Bahrain, Kuwait, Poland, Qatar, Switzerland, the United Arab Emirates, Saudi Arabia and Orlando, FL.
What Lies Ahead for LMT Stock?
Rising geopolitical tensions and escalating regional conflicts across the globe, particularly in regions such as the Middle East, Eastern Europe and the South China Sea, have caused nations to strengthen their defense systems over the past decade. Missiles, being a critical component of military arsenals, are receiving substantial investments as countries prioritize advanced systems for deterrence and security. The focus on upgrading missile technology is significantly boosting the demand for next-generation missile systems.
This trend might have prompted the Mordor Intelligence firm to forecast a compound annual growth rate (CAGR) of 5% for the global missiles and missile defense system market during the 2024-2029 period. This projected growth should bode well for Lockheed Martin, a well-known missile manufacturer.
Notably, Lockheed’s product offerings include air-to-air missiles to give pilots air supremacy; helicopter-launched anti-armor missiles to destroy enemy tanks and other armored vehicles; man-portable short-range anti-armor and assault weapons; kinetic energy hyper-velocity missiles that can defeat all current and future armored threats, hit-to-kill air defense systems that protect the troops from ballistic missiles, cruise missiles, enemy aircraft and weapons of mass destruction.
In particular, PAC-3 is a high-velocity, hit-to-kill missile and the next-generation Patriot missile being developed to provide increased capability against advanced theater ballistic missiles, cruise missiles and hostile aircraft.
Such lethal missiles in its product portfolio help Lockheed secure notable contract wins from the Pentagon and other U.S. allies, like the latest one, amid rapidly expanding geopolitical tensions worldwide. These contract wins should boost LMT’s future revenue generation prospects.
Opportunities for Peers
LMT apart, defense contractors that are likely to benefit from the growth opportunities offered by the missiles and missile defense system market are as follows:
Northrop Grumman NOC: It creates and manufactures warheads, fuses, sophisticated high-speed propulsion systems and other missile components. The company is one of the top suppliers of solid rocket propulsion for air-launched missiles, interceptors, submarine-launched weapons and hypersonic missile systems.
Northrop has a long-term (three to five years) earnings growth rate of 19.1%. The Zacks Consensus Estimate for 2024 sales implies growth of 5.3% from the prior-year reported figure.
RTX Corp. RTX: It offers a variety of combat-proven missile defense systems, including the Patriot missile, Standard Missiles, Advanced Medium-Range Air-to-Air Missiles, Evolved Seasparrow Missiles, the Tomahawk cruise missile and a few more. To keep up with its growing demand for a wide variety of missiles, RTX broke ground with a $115 million worth, 26,000-square-foot expansion of its Redstone Raytheon Missile Integration Facility in April 2024.
RTX boasts a long-term earnings growth rate of 10.2%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 7.2% from the 2023 reported figure.
The Boeing Company BA: For almost 25 years, Boeing has been providing the United States, its allies and international partners with air and missile defense systems. Some of its product offerings are the Avenger Air Defense System, Ground-Based Midcourse Defense and a few additional missiles.
BA boasts a long-term earnings growth rate of 19.3%.
Price Movement
In the past year, shares of Lockheed have surged 14.7% against the industry’s decline of 5.6%.
Image Source: Zacks Investment Research
Zacks Rank
Lockheed 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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