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Lockheed Martin Wins $912M Deal to Support THAAD Program
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Lockheed Martin Corp (LMT - Free Report) recently secured a $911.8-million modification contract for providing element development and support services related to Terminal High Altitude Area Defense (THAAD) missile system. The contract has been awarded by the Missile Defense Agency, Huntsville, AL.
Details of the Deal
Through this deal, Lockheed will offer extended period of performance for additional incremental development, support to flight and ground test program and responsive support to warfighter requirements for sustainment of the Ballistic Missile Defense System throughout the acquisition life cycle.
The latest modification has enhanced the total maximum ceiling value of this contract from $2.34 billion to $3.25 billion.
Work related to the deal will be executed inSunnyvale, CA and Huntsville, AL.
Growing Significance of THAAD
THAAD is an integrated defensive missile system designed to protect against high-altitude ballistic missile threats. Notably, apart from this product line’s well established market in the United States, THAAD enjoys strong demand flow from UAE and the Kingdom of Saudi Arabia (KSA)in the international space. Toward the end of November 2018, KSA signed a letter of offer and acceptance (LOA) with the United States for procuring 44 THAAD launchers, missiles and related equipment, which had an estimated value of around $15 billion. The latest contract win is yet another example of the solid demand that this missile enjoys in the global space.
Of late, other countries in the Middle East, Europe and the Asia-Pacific region have also expressed interest in this missile defense system. The significance of this program can be further implicated by the fact that THAAD includes more than 280 suppliers in 40 states. Moreover,since 2018, Lockheed has hired more than 4,000 employees to meet the needs of its growing business, including new contracts and increased production of its Missiles and Fire Control (MFC) business, which includes THAAD.
What’s Favoring Lockheed Martin?
In recent times, increasing geopolitical tensions across the globe have induced many nations to expand their military arsenal, with missiles constituting a significant part of that. The company, being one of the major missile makers in the United States, stands out among peers by virtue of its broadly-diversified programs and strong order bookings for different variants of missiles. This allows the company’s MFC unit to deliver better-than-expected operational performance.
In the second quarter of 2020, the MFC segment registered 16% year-over-year growth in its top line, with the THAAD missile program being the primary contributor. Given this program’s proven expertise and increasing demand, we expect consistent order flow for Lockheed Martin from the Pentagon. This, in turn, will enable the company’s missile business unit to continue to generate similar top-line growth in the coming days.
Looking Ahead
Per Markets and Markets research firm, the global rocket and missile market is projected to rise from $55.5 billion in 2017 to $70 billion by 2022 at a CAGR of 4.7%. Given this huge opportunity for expansion, the need for developing complex technologies for different variants of missiles will also grow. North America being one of the forerunners in missile manufacturing, such projections indicate solid growth prospects for U.S. missile makers like Lockheed Martin, Northrop Grumman (NOC - Free Report) , Raytheon Technologies (RTX - Free Report) and Boeing (BA - Free Report) .
Price Movement
Lockheed Martin’s share price has risen 3% in the past year against its industry’s decline of 29.2%.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Lockheed Martin Wins $912M Deal to Support THAAD Program
Lockheed Martin Corp (LMT - Free Report) recently secured a $911.8-million modification contract for providing element development and support services related to Terminal High Altitude Area Defense (THAAD) missile system. The contract has been awarded by the Missile Defense Agency, Huntsville, AL.
Details of the Deal
Through this deal, Lockheed will offer extended period of performance for additional incremental development, support to flight and ground test program and responsive support to warfighter requirements for sustainment of the Ballistic Missile Defense System throughout the acquisition life cycle.
The latest modification has enhanced the total maximum ceiling value of this contract from $2.34 billion to $3.25 billion.
Work related to the deal will be executed inSunnyvale, CA and Huntsville, AL.
Growing Significance of THAAD
THAAD is an integrated defensive missile system designed to protect against high-altitude ballistic missile threats. Notably, apart from this product line’s well established market in the United States, THAAD enjoys strong demand flow from UAE and the Kingdom of Saudi Arabia (KSA)in the international space. Toward the end of November 2018, KSA signed a letter of offer and acceptance (LOA) with the United States for procuring 44 THAAD launchers, missiles and related equipment, which had an estimated value of around $15 billion. The latest contract win is yet another example of the solid demand that this missile enjoys in the global space.
Of late, other countries in the Middle East, Europe and the Asia-Pacific region have also expressed interest in this missile defense system. The significance of this program can be further implicated by the fact that THAAD includes more than 280 suppliers in 40 states. Moreover,since 2018, Lockheed has hired more than 4,000 employees to meet the needs of its growing business, including new contracts and increased production of its Missiles and Fire Control (MFC) business, which includes THAAD.
What’s Favoring Lockheed Martin?
In recent times, increasing geopolitical tensions across the globe have induced many nations to expand their military arsenal, with missiles constituting a significant part of that. The company, being one of the major missile makers in the United States, stands out among peers by virtue of its broadly-diversified programs and strong order bookings for different variants of missiles. This allows the company’s MFC unit to deliver better-than-expected operational performance.
In the second quarter of 2020, the MFC segment registered 16% year-over-year growth in its top line, with the THAAD missile program being the primary contributor. Given this program’s proven expertise and increasing demand, we expect consistent order flow for Lockheed Martin from the Pentagon. This, in turn, will enable the company’s missile business unit to continue to generate similar top-line growth in the coming days.
Looking Ahead
Per Markets and Markets research firm, the global rocket and missile market is projected to rise from $55.5 billion in 2017 to $70 billion by 2022 at a CAGR of 4.7%. Given this huge opportunity for expansion, the need for developing complex technologies for different variants of missiles will also grow. North America being one of the forerunners in missile manufacturing, such projections indicate solid growth prospects for U.S. missile makers like Lockheed Martin, Northrop Grumman (NOC - Free Report) , Raytheon Technologies (RTX - Free Report) and Boeing (BA - Free Report) .
Price Movement
Lockheed Martin’s share price has risen 3% in the past year against its industry’s decline of 29.2%.
Zacks Rank
Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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