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Lockheed (LMT) Wins $307M Deal to Aid PAC-3 Missile Program
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Lockheed Martin Corp. (LMT - Free Report) recently clinched a contract for repair and recertification of Phased Array Tracking Radar to Intercept on Target (PATRIOT) - Advanced Capability-3 (PAC-3) missiles. The award has been offered by the U.S. Army Contracting Command, Redstone Arsenal, AL.
Details of the Deal
Valued at $307.1 million, the contract is expected to get completed by Jun 30, 2027. Work related to this deal will be carried out in Grand Prairie, TX.
The contract will serve the U.S. Army and Taiwan, under foreign military sales (FMS).
A Brief Note on PAC-3 Missile System
The PAC-3 is a long-range, air-defense and medium- to high-altitude guided missile system. It is designed to counter tactical ballistic missiles, cruise missiles and advanced aircraft. The system’s radar set provides tactical functions of airspace surveillance, target detection, identification, classification, tracking, missile guidance and engagement support.
The PAC-3 Missile is a high-velocity interceptor that defeats incoming targets by a direct, body-to-body impact. PAC-3 missiles, when deployed in a Patriot battery, significantly increase the Patriot system’s firepower, since 16 PAC-3s load-out on a Patriot launcher compared with four Patriot PAC-2 missiles. The company anticipates demand for this advanced missile system to be high, particularly in politically tense regions of the Middle East.
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.
Lockheed’s Missiles and Fire Control business unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile, Terminal High Altitude Area Defense missile, JASSM, LRASM and many more. Lockheed frequently wins contracts from Pentagon and other U.S. allies involving its variant missile programs, like the latest one, boosting its revenue growth.
Growth Prospects
The global rocket and missiles market is projected to reach $82.0 billion by 2031, witnessing a CAGR of 4.2% from 2022 to 2031, per a report by Allied Market Research 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, Standard Missile-3, Advanced Medium-Range Air-to-Air Missile, Evolved Seasparrow Missile, 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 13% in the past year against the industry's decline of 35%.
Image: Bigstock
Lockheed (LMT) Wins $307M Deal to Aid PAC-3 Missile Program
Lockheed Martin Corp. (LMT - Free Report) recently clinched a contract for repair and recertification of Phased Array Tracking Radar to Intercept on Target (PATRIOT) - Advanced Capability-3 (PAC-3) missiles. The award has been offered by the U.S. Army Contracting Command, Redstone Arsenal, AL.
Details of the Deal
Valued at $307.1 million, the contract is expected to get completed by Jun 30, 2027. Work related to this deal will be carried out in Grand Prairie, TX.
The contract will serve the U.S. Army and Taiwan, under foreign military sales (FMS).
A Brief Note on PAC-3 Missile System
The PAC-3 is a long-range, air-defense and medium- to high-altitude guided missile system. It is designed to counter tactical ballistic missiles, cruise missiles and advanced aircraft. The system’s radar set provides tactical functions of airspace surveillance, target detection, identification, classification, tracking, missile guidance and engagement support.
The PAC-3 Missile is a high-velocity interceptor that defeats incoming targets by a direct, body-to-body impact. PAC-3 missiles, when deployed in a Patriot battery, significantly increase the Patriot system’s firepower, since 16 PAC-3s load-out on a Patriot launcher compared with four Patriot PAC-2 missiles. The company anticipates demand for this advanced missile system to be high, particularly in politically tense regions of the Middle East.
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.
Lockheed’s Missiles and Fire Control business unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile, Terminal High Altitude Area Defense missile, JASSM, LRASM and many more.
Lockheed frequently wins contracts from Pentagon and other U.S. allies involving its variant missile programs, like the latest one, boosting its revenue growth.
Growth Prospects
The global rocket and missiles market is projected to reach $82.0 billion by 2031, witnessing a CAGR of 4.2% from 2022 to 2031, per a report by Allied Market Research 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, Standard Missile-3, Advanced Medium-Range Air-to-Air Missile, Evolved Seasparrow Missile, 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 13% in the past year against the industry's decline of 35%.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.