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L3Harris (LHX) Receives $919M Satellite Contract From SDA
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L3Harris Technologies Inc. (LHX - Free Report) recently secured a $919 million contract from the Space Development Agency (“SDA”) to build 18 infrared space vehicles for the Tranche 2 (T2) Tracking Layer (“TL”) program.
L3Harris, with its high-quality product offering, has been catering to the needs of the U.S. military. The new products that the company is developing will assist in the U.S. military’s ongoing efforts to build a robust constellation of satellites to protect against a new generation of hypersonic weapons that have increased speed, unpredictable flight trajectories and faint heat signatures.
Previous Contracts
L3Harris previously built four satellites for SDA’s Tranche 0 (“T0”) TL program that will be launched this year, together with the U.S. Missile Defense Agency’s Hypersonic and Ballistic Tracking Space Sensor satellite.
LHX is also building a 16-vehicle satellite constellation for SDA’s Tranche 1 TL program, which is scheduled for launch in 2025. The constellation follows the T0TL capabilities with targeted technology enhancements, expanded coverage, increased integration and greater production efficiencies.
What’s Ahead?
As nations continue to strengthen their defense structure, spending on military satellite systems is increasing manifold, backed by demand for technologically advanced orbital assets strategically designed for missile interception and recognition.
Per a report by Mordor Intelligence, the military satellite market is estimated to be $31.97 billion in 2024 and is expected to reach $53.85 billion by 2029, at a CAGR of 10.99% during 2024-2029. This should benefit L3Harris, which enjoys an extensive satellite portfolio.
The current United States administration's fiscal 2024 budget proposal is expected to include $842 billion as funding for the Pentagon, indicating a 3.2% increase from the previous year’s amount. Such increased provisions are expected to reinforce L3Harris’ position as a leader in the U.S. military’s multilayered approach to missile warning and defense.
The company supports various programs like the U.S. Space Force’s (“USSF”) Wide Field of View Missile Warning Sensor and the USSF Space Systems Command’s Medium Earth Orbit Missile Track Custody Epoch 1 Program. Such programs and contract wins involving satellite defense systems, including the latest one, should boost its revenue generation prospects in the coming months.
Peer Prospects
Considering the solid growth opportunities offered by the global military satellite market, other defense primes like Lockheed Martin (LMT - Free Report) , Airbus SE (EADSY - Free Report) and Northrop Grumman Corp. (NOC - Free Report) , with a strong presence in this space, should also benefit.
Lockheed Martin uses cutting-edge technology to build capabilities that comprise layered space defense systems. The LM 400, a multi-mission satellite that can be tailored for almost any mission, is LMT’s most flexible satellite bus. On Jan 16, 2023, SDA awarded Lockheed Martin a contract to provide 16 wide field of view missile warning/missile tracking space vehicles with infrared sensors and two space vehicles with missile defense infrared sensors as part of its T2TL constellation.
LMT boasts a long-term (three- to five-year) earnings growth rate of 7.9%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 2.9% from the previous year's estimated figure.
Airbus is a world leader in military satellite communication services with a broad portfolio of services, including the SATCOMBw, Syracuse 4A and 4B, Skynet 5 and many more. Airbus has been a long-term operator of the SATCOMBw secure satellite communications system for Germany’s Armed Forces.
EADSY boasts a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 9.9% from the previous year's estimated figure.
Northrop Grumman’s portfolio of space systems includes Strategic SATCOM, Protected Tactical SATCOM satellites and payloads, Next-Generation Overhead Persistent Infrared program satellites and payloads, etc. On Oct 30, 2023, Northrop was awarded a contract by SDA to build 38 data transport satellites as part of its T2TL-Alpha program. This follows the August 2023 award of 36 satellites as part of T2TL-Beta.
NOC boasts long-term earnings growth rate of 2.3%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 5% from the year-ago estimated figure.
Price Performance
In the past year, shares of LHX have gained 6.8% against the industry’s 6.3% decline.
Image: Bigstock
L3Harris (LHX) Receives $919M Satellite Contract From SDA
L3Harris Technologies Inc. (LHX - Free Report) recently secured a $919 million contract from the Space Development Agency (“SDA”) to build 18 infrared space vehicles for the Tranche 2 (T2) Tracking Layer (“TL”) program.
L3Harris, with its high-quality product offering, has been catering to the needs of the U.S. military. The new products that the company is developing will assist in the U.S. military’s ongoing efforts to build a robust constellation of satellites to protect against a new generation of hypersonic weapons that have increased speed, unpredictable flight trajectories and faint heat signatures.
Previous Contracts
L3Harris previously built four satellites for SDA’s Tranche 0 (“T0”) TL program that will be launched this year, together with the U.S. Missile Defense Agency’s Hypersonic and Ballistic Tracking Space Sensor satellite.
LHX is also building a 16-vehicle satellite constellation for SDA’s Tranche 1 TL program, which is scheduled for launch in 2025. The constellation follows the T0TL capabilities with targeted technology enhancements, expanded coverage, increased integration and greater production efficiencies.
What’s Ahead?
As nations continue to strengthen their defense structure, spending on military satellite systems is increasing manifold, backed by demand for technologically advanced orbital assets strategically designed for missile interception and recognition.
Per a report by Mordor Intelligence, the military satellite market is estimated to be $31.97 billion in 2024 and is expected to reach $53.85 billion by 2029, at a CAGR of 10.99% during 2024-2029. This should benefit L3Harris, which enjoys an extensive satellite portfolio.
The current United States administration's fiscal 2024 budget proposal is expected to include $842 billion as funding for the Pentagon, indicating a 3.2% increase from the previous year’s amount. Such increased provisions are expected to reinforce L3Harris’ position as a leader in the U.S. military’s multilayered approach to missile warning and defense.
The company supports various programs like the U.S. Space Force’s (“USSF”) Wide Field of View Missile Warning Sensor and the USSF Space Systems Command’s Medium Earth Orbit Missile Track Custody Epoch 1 Program. Such programs and contract wins involving satellite defense systems, including the latest one, should boost its revenue generation prospects in the coming months.
Peer Prospects
Considering the solid growth opportunities offered by the global military satellite market, other defense primes like Lockheed Martin (LMT - Free Report) , Airbus SE (EADSY - Free Report) and Northrop Grumman Corp. (NOC - Free Report) , with a strong presence in this space, should also benefit.
Lockheed Martin uses cutting-edge technology to build capabilities that comprise layered space defense systems. The LM 400, a multi-mission satellite that can be tailored for almost any mission, is LMT’s most flexible satellite bus. On Jan 16, 2023, SDA awarded Lockheed Martin a contract to provide 16 wide field of view missile warning/missile tracking space vehicles with infrared sensors and two space vehicles with missile defense infrared sensors as part of its T2TL constellation.
LMT boasts a long-term (three- to five-year) earnings growth rate of 7.9%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 2.9% from the previous year's estimated figure.
Airbus is a world leader in military satellite communication services with a broad portfolio of services, including the SATCOMBw, Syracuse 4A and 4B, Skynet 5 and many more. Airbus has been a long-term operator of the SATCOMBw secure satellite communications system for Germany’s Armed Forces.
EADSY boasts a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 9.9% from the previous year's estimated figure.
Northrop Grumman’s portfolio of space systems includes Strategic SATCOM, Protected Tactical SATCOM satellites and payloads, Next-Generation Overhead Persistent Infrared program satellites and payloads, etc. On Oct 30, 2023, Northrop was awarded a contract by SDA to build 38 data transport satellites as part of its T2TL-Alpha program. This follows the August 2023 award of 36 satellites as part of T2TL-Beta.
NOC boasts long-term earnings growth rate of 2.3%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 5% from the year-ago estimated figure.
Price Performance
In the past year, shares of LHX have gained 6.8% against the industry’s 6.3% decline.
Image Source: Zacks Investment Research
Zacks Rank
L3Harris Technologies currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.