Lockheed Martin Corp.’s (LMT - Free Report) Missile and Fire Control (MFC) business segment recently secured a $183.2 million modification contract for High Mobility Artillery Rocket Systems (HIMARS) M142 launchers. The contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL.
Work related to the deal will be performed in Camden, AZ; Boca Raton and Grand Prairie, TX. The contract is scheduled to be completed by Dec 20, 2023.
HIMARS is the newest member in the Multiple Launch Rocket System (MLRS) family. It enables troops in engaging and defeating artillery, and air defense concentrations.
The rocket system carries a six-pack of GMLRS rockets or one TACMS missile, and is designed to launch the entire MLRS family of munitions. Additionally, it simplifies coalition operations, training, logistics and military coordination.
What Favors Lockheed Martin?
In recent times, missile defense systems have gained significant traction in the U.S. aerospace-defense market attributable to the advancements and integration of new tactical features, followed by improved markets for missile systems, directed energy and anti-satellite weapons. Lockheed Martin, a prominent missile developer and Pentagon’s largest defense contractor, has been witnessing growing demand for missiles, resulting in a significantly higher inflow of contracts.
Interestingly, per a latest report by Markets and Research.biz, global MLRS market value is projected to see CAGR of 4.4% to $647 million by 2025 from 2020. Such encouraging growth predictions can be attributed to heavy and frequent investments made by countries like the United States, China, Russia and Israel forthe development of next-generation missiles and missile defense systems along with the increase in artillery modernization programs and growing territorial disputes. These eventually fuel the global MLRS’ market growth.
Notably, these aforementioned developments and technical advancements will further increase demand for missiles, spare parts and technical services, thereby boosting growth prospects of defense contractors like Lockheed Martin in this market.
Another Stock in Play
North America remains one of the forerunners in the MLRS market. Lockheed is poised togain from this market’s growth on account of its dominant position as the nation’s MLRS manufacture. BAE Systems plc (BAESY - Free Report) is also expected to benefit from this market’s growth since it supplies the tactical vehicle on which the rocket launcher is being carried on.
Shares of Lockheed Martin have gained 1.6% in the past 12 months against the industry’s decline of 29.2%.
Zacks Rank & Key Picks
Lockheed Martin currently carries a Zacks Rank #3 (Hold).
A few better-ranked companies in the same sector are Ducommun Inc. (DCO - Free Report) and Teledyne Technologies (TDY - Free Report) . While Ducommun sports a Zacks Rank #1 (Strong Buy), Teledyne Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ducommun has a four-quarter average earnings surprise of 60.22%. The Zacks Consensus Estimate for 2020 earnings has increased 18.5% to $2.18 in the past 90 days.
Teledyne has a four-quarter earnings surprise of 11.7%. The Zacks Consensus Estimate for 2020 earnings has moved up 4.8% to $9.75 in the past 90 days.
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