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Lockheed (LMT) Wins $255M FMS Deal to Provide THAAD Batteries

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Lockheed Martin Corp.'s (LMT - Free Report) Space Systems Unit recently secured a $254.7-million follow-on foreign military sales (FMS) contract for providing maintenance and sustainment services for two Terminal High Altitude Area Defense batteries for the defense forces of the United Arab Emirates (UAE). The contract has been awarded by the Missile Defense Agency, Huntsville, AL.

Details of the Deal

Per the deal terms, Lockheed Martin’s maintenance and sustainment services to UAE will include logistics management, logistics product database, training, missile and ground repair, missile field surveillance program, alongside other services.

Work related to the deal will be executed in Sunnyvale, CA; Grande Prairie, TX; Huntsville, AL, and others.

Growing Significance of THAAD

Lockheed Martin’s 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 batteries have been deployed in other countries like the United Arab Emirates, Saudi Arabia, Japan, South Korea and Israel. The latest contract win is an example of the solid demand enjoyed by this missile in the global space.

Of late, other countries in the Middle East, Europe and the Asia-Pacific regions have also expressed interest in this missile defense system. The requirement for THAAD has been soaring as the Army continues to integrate the system with the Patriot Air-and-Missile Defense system to build a stronger missile defense architecture.

Fiscal 2021 Defense Budget to Aid THAAD

The U.S. government’s fiscal 2021 defense budget includes a proposed spending plan of $916 million on the THAAD ballistic missile defense systems. Such overwhelming spending provisions, in turn, should usher in more contracts for Lockheed Martin’s THAAD batteries.

Other Missile Makers Poised to Benefit

Considering the geopolitical scenario, which is favorable for the missile market growth as a whole, and the fact that the United States has the largest defense budget and is the largest military weapon exporter globally, other prominent missile makers in the nation, such as Northrop Grumman (NOC - Free Report) , General Dynamics (GD - Free Report) and Raytheon Technologies (RTX - Free Report) , are certainly poised to benefit.

Notably, Northrop Grumman’s missile defense program includes AGM-88E advanced anti-radiation guided missiles (AARGM), Ground-Based Strategic Deterrent (GBSD) weapon system and rocket propulsion systems.

General Dynamics’ Ordnance and Tactical Systems are the system integrators of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.

Similarly, Raytheon Technologies' missile defense capabilities include Patriot GEM-T missiles, SM-6 missile destroyers’ cruise missiles and ballistic missiles, NASAMS, among others.

Price Movement & Zacks Rank

Lockheed Martin, a Zacks Rank #3 (Hold) company, has lost 18.5% in the past year compared with the industry’s decline of 25.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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