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Lockheed (LMT) Wins $450M Deal to Support JASSM Program

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Lockheed Martin Corp. (LMT - Free Report) recently clinched a contract to provide production support for Joint Air-to-Surface Standoff Missile (JASSM). The Air Force Life Cycle Management Center, Eglin Air Force Base, FL awarded the deal.

Valued at $450 million, the contract is projected to be completed by Jun 10, 2027. Per the terms, Lockheed will provide lifecycle support for all efforts related to JASSM in the areas of system upgrades, integration, production, sustainment, management and logistical support.

A Brief Note on JASSM

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 is 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 testament to that.

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 10.5%. The Zacks Consensus Estimate for its 2022 sales implies an improvement of 5.8% 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 6.1%. 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 sales suggests an improvement of 21.8% from the 2021 reported figure.

Price Movement and Zacks Rank

Shares of Lockheed have gained 8% in the past year against the industry’s decline of 44.4%.

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.

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