We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Lockheed (LMT) Wins $504M Deal to Support PAC-3 Missiles
Read MoreHide Full Article
Lockheed Martin Corp.’s (LMT - Free Report) Missiles and Fire Control business unit recently clinched a modification contract to provide logistics support for Patriot Advanced Capability-3 missiles. The award has been offered by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $503.7 million, this contract is expected to be completed by May 25, 2026.
What’s Favoring Lockheed?
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.
To this end, it is imperative to mention that in 2022, 14 nations chose PAC-3 Cost Reduction Initiative and PAC-3 Missile Segment Enhancement (MSE) to provide missile defense capabilities.
More recently, in October 2023, the government of Switzerland signed an agreement to purchase Lockheed’s PAC-3 MSE missiles and related support equipment. With this agreement, Switzerland became PAC-3’s 15th partner nation. These are indicative of the solid demand that PAC-3 enjoys in the missile market, which, in turn, ushers in notable contract wins for LMT, like the latest one, thereby bolstering its revenue generation prospects.
Growth Prospects
To further enhance the market reach of PAC-3 missiles, in July 2023, Lockheed announced that its PAC-3 MSE interceptor has successfully communicated with the AN/SPY-1 Radar, a key component in the Aegis Weapon System. This comes as a part of Lockheed’s strategy to integrate PAC-3 MSE in Aegis, thereby targeting to provide a proven, Integrated Air and Missile Defense capability with growing capacity. This, in turn, will allow the U.S. Navy and the naval defense units of other U.S. allies to defend (more efficiently) against advanced, maneuverable threats.
Such developments are expected to enable Lockheed in fetching more revenues from the global rocket and missiles market, which is projected to witness a CAGR of 6.1% to reach $77.4 billion in 2028 from the 2023 level (per a report by Markets and Markets firm).
Such market projections also reflect increased growth opportunities for other major missile players like RTX Corp. (RTX - Free Report) , Northrop Grumman (NOC - Free Report) and Boeing (BA - Free Report) in the aforementioned market.
Notably, RTX 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.
RTX boasts a long-term earnings growth rate of 9.4%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 10.5% from the 2022 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. 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.
NOC boasts a long-term earnings growth rate of 2.4%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 6.4% from the 2022 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 2023 sales suggests an improvement of 15.8% from the 2022 reported figure.
Price Movement and Zacks Rank
Shares of Lockheed have lost 4.6% in the past year compared with the industry's decline of 9%.
Image: Bigstock
Lockheed (LMT) Wins $504M Deal to Support PAC-3 Missiles
Lockheed Martin Corp.’s (LMT - Free Report) Missiles and Fire Control business unit recently clinched a modification contract to provide logistics support for Patriot Advanced Capability-3 missiles. The award has been offered by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $503.7 million, this contract is expected to be completed by May 25, 2026.
What’s Favoring Lockheed?
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.
To this end, it is imperative to mention that in 2022, 14 nations chose PAC-3 Cost Reduction Initiative and PAC-3 Missile Segment Enhancement (MSE) to provide missile defense capabilities.
More recently, in October 2023, the government of Switzerland signed an agreement to purchase Lockheed’s PAC-3 MSE missiles and related support equipment. With this agreement, Switzerland became PAC-3’s 15th partner nation. These are indicative of the solid demand that PAC-3 enjoys in the missile market, which, in turn, ushers in notable contract wins for LMT, like the latest one, thereby bolstering its revenue generation prospects.
Growth Prospects
To further enhance the market reach of PAC-3 missiles, in July 2023, Lockheed announced that its PAC-3 MSE interceptor has successfully communicated with the AN/SPY-1 Radar, a key component in the Aegis Weapon System. This comes as a part of Lockheed’s strategy to integrate PAC-3 MSE in Aegis, thereby targeting to provide a proven, Integrated Air and Missile Defense capability with growing capacity. This, in turn, will allow the U.S. Navy and the naval defense units of other U.S. allies to defend (more efficiently) against advanced, maneuverable threats.
Such developments are expected to enable Lockheed in fetching more revenues from the global rocket and missiles market, which is projected to witness a CAGR of 6.1% to reach $77.4 billion in 2028 from the 2023 level (per a report by Markets and Markets firm).
Such market projections also reflect increased growth opportunities for other major missile players like RTX Corp. (RTX - Free Report) , Northrop Grumman (NOC - Free Report) and Boeing (BA - Free Report) in the aforementioned market.
Notably, RTX 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.
RTX boasts a long-term earnings growth rate of 9.4%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 10.5% from the 2022 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. 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.
NOC boasts a long-term earnings growth rate of 2.4%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 6.4% from the 2022 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 2023 sales suggests an improvement of 15.8% from the 2022 reported figure.
Price Movement and Zacks Rank
Shares of Lockheed have lost 4.6% in the past year compared with the industry's decline of 9%.
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.