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Lockheed Martin (LMT) Wins $1B Deal to Support SBIRS Program

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Lockheed Martin Corp. (LMT - Free Report) recently secured a contract, under which it will provide logistics support for Space Based Infrared Surveillance. The contract was awarded by the Missile Systems Center, Peterson AFB, CO.

Valued at $1 billion, the contract is expected to get completed by Jul 1, 2026. The entire task will be executed in multiple locations across the state of Colorado.

Importance of SBIRS

Space Based Infrared Systems (SBIRS) uses infrared surveillance to provide enhanced missile warning capabilities for the U.S. military and is considered one of the nation’s highest priority space programs.

With evolving time, upgraded versions of SIBRS have been innovated. Notably, SBIRS Geosynchronous Earth Orbit (SBIRS GEO-5) satellite-built by Lockheed recently joined the Space Force's orbiting Overhead Persistent Infrared (OPIR) missile warning constellation equipped with powerful scanning and staring surveillance sensors.

Built in about five years, SBIRS GEO-5 is the first military space satellite built on an LM 2100 Combat Bus, a version of Lockheed Martin's modernized, modular LM 2100 space vehicle with greatly enhanced resiliency. Such innovations surely elevate Lockheed’s position in the missile defense market, with this defense major being the SBIRS prime contractor, while Northrop Grumman (NOC - Free Report) is the payload integrator.

Missile Defense & Lockheed

Increasing geopolitical tensions across the globe have prompted nations to strengthen their defense systems manifold, especially missile defense systems. Tom McCormick, vice president of Lockheed Martin Space's OPIR Mission Area, stated that more than 1,000 ballistic missile launches occur globally every year.

To save itself from such threats, the United States has been investing on enhancing the nation’s missile defense networks. In this missile defense program, Lockheed Martin, the nation’s largest defense contractor plays a major role. Notably, the company’s portfolio includes a wide range of air, sea and land-based missile systems like Patriot Advanced Capability-3 (PAC-3), Terminal High Altitude Area Defense (THAAD), Joint Air-to-Surface Standoff Missile (JASSM), Javelin tactical missile, Trident II D5 Fleet Ballistic Missile (FBM) and many more.

While such missiles aid in counter-attacking incoming missile threats to a nation, significant missile warning capabilities like SBIRS form an integral portion of a nation’s defense strategy, helping in prevention of casualties.

Growth Prospects

Cross-border conflicts between nations along with spurring intra-state disputes have resulted in civil wars like the ones going on in the Middle East. Therefore, the boom in the missile defense market  is expected to continue over the next few years. Anticipating this trend, missiles and missile defense systems market is estimated to register a CAGR of over 10% during 2020-2025 period, as predicted by Mordor Intelligence.

This should usher in frequent contract wins, like the latest one, for prominent U.S. missile makers like Lockheed, Raytheon Technologies (RTX - Free Report) and Boeing (BA - Free Report) , with North America generating the highest revenues.

Price Performance & Zacks Rank

Shares of Lockheed Martin have lost 5.5% in a year against the industry’s growth of 3.7%.

Zacks Investment ResearchImage Source: Zacks Investment Research

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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