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Lockheed (LMT) Wins $219M Deal for Precision Strike Missile

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Lockheed Martin Corporation (LMT - Free Report) recently secured a modification contract for the Precision Strike Missile (PrSM) early operational capability Lot 3 requirement.  The deal has been given by the Army Contracting Command, Redstone Arsenal, AL.

Valued at $219.7 million, the contract is expected to be completed on Mar 6, 2026. The work related to this contract will be executed in Grand Prairie, TX.

What’s Favoring Lockheed Martin?

Lockheed Martin’s PrSM is a long-range precision-strike missile designed for the U.S. Army, which is capable of neutralizing targets beyond 400 kilometers. The new surface-to-surface weapon features open systems architecture designed for maximum adaptability and is compatible with the High Mobility Artillery Rocket System and Multiple Launch Rocket System family of launchers.

Notably, Lockheed’s Missiles and Fire Control (MFC) unit provides air and missile defense systems and tactical missiles. Apart from PrSM, the MFC segment’s portfolio includes Joint Air-to-Surface Standoff Missile, Long Range Anti Ship Missile and many more missile programs.

As one of the major missile makers in the United States and with such remarkable missile systems in its product portfolio, Lockheed enjoys a strong demand base in the missile defense market. The latest contract win is a bright example of that.

Growth Prospects

Of late, nations have been increasing their spending on military equipment and weaponry to modernize and upgrade their defense systems amid rising geopolitical tensions. In this context, the demand for missiles is likely to gain momentum as these play a very important role in military missions. Per a report from the Mordor Intelligence firm, the global missiles and missile defense system market is anticipated to witness a CAGR of 4.8% during the 2024-2029 period.

Such market growth opportunity, along with the recent contract win, should boost Lockheed Martin’s operating results from the MFC unit. In December 2023, Lockheed Martin delivered the first PrSM to the U.S. Army after the successful production qualification test in November 2023.

Some other prominent defense majors that have a strong position in the missile industry and are thus also likely to enjoy the perks of the expanding missile defense market are discussed below.

Northrop Grumman (NOC - Free Report) is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. Its Defense Systems unit includes the U.S. Navy’s Advanced Anti-Radiation Guided Missile, the Hypersonic Attack Cruise Missile and many more.

NOC boasts a long-term (three-to-five-years) earnings growth rate of 10.1%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 4.6% from the 2023 reported figure.

RTX Technologies’ (RTX - Free Report) Missiles & Defense is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. Its varied missile portfolio includes SM-6, which is the only weapon that can perform anti-air warfare, ballistic missile defense and anti-surface warfare missions.

RTX’s long-term earnings growth rate is 10.2%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 5.7% from the 2023 reported figure.

General Dynamics’ (GD - Free Report) Ordnance and Tactical Systems (OTS) designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces. It is the system integrator of the 2.75-inch Hydra-70 family of rockets. OTS remains one of the leading providers of missile subsystems in support of U.S. tactical and strategic missiles.

GD boasts a long-term earnings growth rate of 10.8%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 9.1% from the 2023 reported figure.

Price Performance

In the past month, shares of LMT have gained 1.1% compared with the industry’s 0.5% rise.

Zacks Investment Research
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Zacks Rank

Lockheed Martin currently has 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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