Back to top

Image: Bigstock

Lockheed (LMT) Missile Unit Wins $319M Deal to Support JASSM

Read MoreHide Full Article

Lockheed Martin Corp.’s (LMT - Free Report) business unit, Missiles and Fire Control, recently secured a modification contract involving Joint Air-to-Surface Standoff Missiles (JASSM). The Air Force Life Cycle Management Center, Eglin Air Force Base, FL has awarded the contract.

Details of the Deal

Valued at $318.9 million, the contract is expected to get completed by Jan 31, 2026. In particular, the modification under this contract offers the option to add 308 Joint Air-to-Surface Standoff Extended Range missiles with containers.

Work related to this deal will take place in Orlando, FL and Troy, AL.

A Brief Note on JASSM

The JASSM is a long-range, conventional, stealthy, air-launched ground attack cruise missile designed for the Air Force and international partners with a range of 223-621.4 miles. JASSM was designed to destroy high-value, well-defended, fixed and re-locatable targets. The threshold integration aircraft were F-16, B-52, and F/A-18 E/F.

The airframe design was to be compatible with all intended JASSM launch platforms — the B-52H, F-16C/D, F/A-18E/F, F-15E, F-117, B-1B, B-2, P-3C and S-3B.

What’s Favoring Lockheed Martin?

Increasing geopolitical and socioeconomic turmoil worldwide has prompted nations, both developed and developing, to expand their respective military arsenal with missiles constituting a significant portion of that inventory.

Notably, Lockheed’s JASSM is integrated on a handful of the U.S. Air Force's jets like B-1B, B-2, B-52, F-16 and F-15E. Internationally, JASSM is carried on the F/A-18A/B and the F-18C/D aircraft. Future integration efforts will focus on the U.S. and international versions of Lockheed Martin F-35 Lightning II fighter aircraft and other international platforms. This surely indicates the strong demand that this missile enjoys in the domestic as well as international defense space. The latest contract win is a further testament to that.

As one of the major missile makers in the United States, Lockheed Martin thus stands out among its peers and its Missiles and Fire Control unit has been witnessing solid top-line growth. Notably, in fourth-quarter 2021, revenues at its Missiles and Fire Control unit came in at $3.22 billion, increasing 12% year over year, driven by higher net sales for integrated air and missile defense programs, and tactical and strike missile programs.

Considering the latest contract win, we expect this unit of Lockheed to show similar solid performance in the days ahead.

Looking Ahead

The global rockets and missiles market, valued at $58.3 billion in 2021, is projected to witness a CAGR of 4.8%, to reach $73.8 billion by 2026 per a report by Markets and Markets firm.

Such projections reflect increased growth opportunities for major missile players like Lockheed Martin, Raytheon (RTX - Free Report) , Northrop Grumman (NOC - Free Report) and Boeing (BA - Free Report) in the aforementioned market.

Notably, Raytheon offers a variety of combat-proven missile defense systems, including the Patriot missile, Standard Missile-6 (SM-6), Standard Missile-3 (SM-3), Advanced Medium-Range Air-to-Air Missile (AMRAAM), Evolved Seasparrow Missile (ESSM), Tomahawk cruise missile and a few more.

Raytheon boasts a long-term earnings growth rate of 10.2%. The Zacks Consensus Estimate for its 2022 earnings implies an improvement of 12.2% from the 2021 reported figure.

Northrop manufactures a variety of air-, sea- and land-based missile systems propulsion control systems that support the U.S. Missile Defense Agency (MDA). It also produces airborne missile warning systems as well as medium-class solid rocket motors for the U.S. Navy's Trident II Fleet Ballistic Missile program.

Northrop boasts a long-term earnings growth rate of 6.2%. The Zacks Consensus Estimate for its 2022 sales suggests an improvement of 2.6% from the 2021 reported figure.

Boeing’s missile defense capabilities provide defensive and strategic systems that protect the homeland and deployed forces. The company’s systems within the Integrated Air & Missile Defense portfolio include Arrow 3, which offers regional missile defense capabilities to enable an effective response to short and medium-range ballistic missiles.

BA boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for its 2022 earnings suggests an improvement of 137.2% from the 2021 reported figure.

Price Movement and Zacks Rank

Shares of Lockheed have gained 24.4% in the past year against the industry's decline of 32.3%.

Zacks Investment Research
Image Source: Zacks Investment Research

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.