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Lockheed Martin (LMT) Secures $2.8B Deal for GMLRS Support

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Lockheed Martin Corp.’s (LMT - Free Report) Missiles and Fire Control (MFC) business segment recently secured a Foreign Military Sales (FMS) contract for delivering rocket pods for Guided Multiple Launch Rocket Systems (GMLRS) alternative warhead. Work related to the deal is scheduled to be completed by Oct 31, 2024.

Valued at $2.77 billion, the contract was awarded by the U.S. Army Contracting Command, Redstone Arsenal, AL. Per the terms, the MFC unit will also supply GMLRS unitary warhead rocket pods and low-cost reduced range practice rocket pods, apart from offering cybersecurity services, integrated product support and other services.

Work locations for the entire task will be determined with each order.

A Brief Note on MLRS

The Multiple Launch Rocket systems (MLRS) family of munitions comprises a variety of combat-proven low-cost precision-strike rockets and missiles. Primarily designed for fixed targets, GMLRS can be used to destroy enemy bunkers, troop locations, armored vehicles, and equipment or other pertinent high-value targets. Notably, GMLRS unitary and GMLRS alternative warhead are different variants of GMLRS.

In May 2019, Lockheed won a contract to develop new modular pods for GMLRS rockets. Through these new pods, the company aims at improving reload operations and ensuring that warfighters have adequate rounds available to them when they are most needed. We believe the latest contract win hints at enhanced development of MLRS family of munitions and expect further progress in the coming days.

What’s Favoring Lockheed Martin?

In recent times, the importance of missile defense systems in the U.S. aerospace-defense market has gained significant traction. This upside can be attributed to advancements and integration of new tactical features followed by improved markets for cruise missiles, ballistic missiles, air to air missile, directed energy weapons and anti-satellite weapons. With Lockheed Martin being a prominent missile developer and the Pentagon’s largest defense contractor, increasing demand for missiles has been resulting in significantly higher inflow of contracts.

This in turn has resulted in revenues at the company’s MFC segment to improve significantly. Notably, the MFC unit recorded 4% revenue growth in the fourth quarter of 2020. Moving ahead, we expect this business segment to deliver similar top-line performance, based on consistent order flows from the Pentagon like the latest one.

Looking ahead

Per a report by Mordor Intelligence, the global Missiles and Missile Defense Systems (MMDS) market value is projected to see a CAGR of over 10% during 2021-2026 time period. The uptick is likely to be driven by growing conflicts between various countries and the increasing number of investments on missile defense systems being made by different countries worldwide, along with rapid technological advancements.

Such impressive projections should bode well for prominent missile makers like Lockheed Martin, Raytheon Technologies (RTX - Free Report) , Boeing (BA - Free Report) and Northrop Grumman Corp. (NOC - Free Report)

Price Performance & Zacks Rank

In a year’s time, shares of Lockheed Martin have gained 9.9% compared with the industry’s 26% surge.

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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