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BAE Systems (BAESY) Wins Deal for Amphibious Combat Vehicles
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BAE Systems Inc.’s (BAESY - Free Report) business unit, BAE Systems Land & Armaments LP, recently clinched a modification contract involving Amphibious Combat Vehicles (ACV). The award has been offered by the Marine Corps Systems Command, Quantico, VA.
Details of the Deal
Valued at $79.2 million, the contract is expected to be completed in July 2026. Per the terms of the deal, BAE Systems will provide the additional subcontract line-item numbers for the procurement of three production representative test vehicles for the ACV recovery variant and test support.
Majority of the work related to the contract will be carried out in York, PA.
What’s Favoring BAE Systems?
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities. Such increased spending tends to benefit BAE Systems as its Platforms & Services business manufactures and upgrades combat vehicles, weapons and munitions, and provides naval ship repair.
BAE Systems’ ACV is designed in a way that can fulfill the complex mission objective of deploying Marines from the ship to the shore. It represents a unique mix of true open-ocean amphibious capability, land mobility, survivability, and payload. It exhibits tremendous growth potential to accommodate the evolving operational needs of the United States Marine Corps (“USMC”). The ACV family includes the ACV-C, ACV-30 and ACV-R.
Such features may have attracted the USMC and thus resulted in multiple contract wins for BAE Systems.
Growth Prospects
As demand for an efficient security system that can strengthen naval sea warfare capabilities rises, so does the prospects of the naval vessels market. Per a report from Mordor Intelligence firm, the naval vessels market is projected to witness a CAGR of 6.98% during the 2024-2029 period. This market growth opportunity should boost BAE Systems’ operating results.
Notably, in 2023, BAESY’s Platforms & Services business generated 28% of its sales from the Maritime sector. The unit witnessed increased sales on account of combat vehicles and ship repairs, ending the year with a backlog of $14.3 billion.
Some other defense players that can gain from the expanding naval vessel market are Lockheed Martin (LMT - Free Report) , Huntington Ingalls Industries (HII - Free Report) and General Dynamics (GD - Free Report) .
Lockheed’s Rotary and Mission Systems (RMS) unit supports integrated warfare systems and sensors programs such as the AEGIS Combat System, the Littoral Combat Ship (LCS) and Multi-Mission Surface Combatant for the U.S. Navy and other allies. The freedom-variant LCS USS Nantucket (LCS 27) is a resilient, flexible warship designed to encounter the evolving missions of the U.S. Navy. The RMS unit ended 2023 with a backlog of $37.7 billion.
LMT’s long-term (three-to five-years) earnings growth rate is 4.2%. The Zacks Consensus Estimate for 2024 sales implies growth of 2.7% from the prior-year figure.
Huntington Ingalls’ Ingalls Shipbuilding segment constructs amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters for the U.S. Navy and boasts a strong portfolio of products. The Newport News segment is involved in the design and construction of nuclear-powered aircraft carriers and submarines. On Feb 23, 2024, HII launched the Virginia-class submarine Massachusetts (SSN 798).
HII’s long-term earnings growth rate is 6.5%. The Zacks Consensus Estimate for 2024 sales implies growth of 2% from the prior-year figure.
General Dynamics’ Marine Systems segment is the leading designer and builder of nuclear-powered submarines and a leader in surface combatant and auxiliary ship design and construction for the U.S. Navy. The two major programs are the Virginia-class and Columbia-class submarines. The unit, comprising 29% of GD’s total revenues in 2023, ended the year with a backlog of $45.9 billion.
GD’s long-term earnings growth rate is 10.8%. The Zacks Consensus Estimate for 2024 sales implies growth of 9.9% from the prior-year figure.
Price Performance
In the past six months, shares of BAE Systems have gained 38% compared with the industry’s 24.4% rise.
Image: Bigstock
BAE Systems (BAESY) Wins Deal for Amphibious Combat Vehicles
BAE Systems Inc.’s (BAESY - Free Report) business unit, BAE Systems Land & Armaments LP, recently clinched a modification contract involving Amphibious Combat Vehicles (ACV). The award has been offered by the Marine Corps Systems Command, Quantico, VA.
Details of the Deal
Valued at $79.2 million, the contract is expected to be completed in July 2026. Per the terms of the deal, BAE Systems will provide the additional subcontract line-item numbers for the procurement of three production representative test vehicles for the ACV recovery variant and test support.
Majority of the work related to the contract will be carried out in York, PA.
What’s Favoring BAE Systems?
Nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities. Such increased spending tends to benefit BAE Systems as its Platforms & Services business manufactures and upgrades combat vehicles, weapons and munitions, and provides naval ship repair.
BAE Systems’ ACV is designed in a way that can fulfill the complex mission objective of deploying Marines from the ship to the shore. It represents a unique mix of true open-ocean amphibious capability, land mobility, survivability, and payload. It exhibits tremendous growth potential to accommodate the evolving operational needs of the United States Marine Corps (“USMC”). The ACV family includes the ACV-C, ACV-30 and ACV-R.
Such features may have attracted the USMC and thus resulted in multiple contract wins for BAE Systems.
Growth Prospects
As demand for an efficient security system that can strengthen naval sea warfare capabilities rises, so does the prospects of the naval vessels market. Per a report from Mordor Intelligence firm, the naval vessels market is projected to witness a CAGR of 6.98% during the 2024-2029 period. This market growth opportunity should boost BAE Systems’ operating results.
Notably, in 2023, BAESY’s Platforms & Services business generated 28% of its sales from the Maritime sector. The unit witnessed increased sales on account of combat vehicles and ship repairs, ending the year with a backlog of $14.3 billion.
Some other defense players that can gain from the expanding naval vessel market are Lockheed Martin (LMT - Free Report) , Huntington Ingalls Industries (HII - Free Report) and General Dynamics (GD - Free Report) .
Lockheed’s Rotary and Mission Systems (RMS) unit supports integrated warfare systems and sensors programs such as the AEGIS Combat System, the Littoral Combat Ship (LCS) and Multi-Mission Surface Combatant for the U.S. Navy and other allies. The freedom-variant LCS USS Nantucket (LCS 27) is a resilient, flexible warship designed to encounter the evolving missions of the U.S. Navy. The RMS unit ended 2023 with a backlog of $37.7 billion.
LMT’s long-term (three-to five-years) earnings growth rate is 4.2%. The Zacks Consensus Estimate for 2024 sales implies growth of 2.7% from the prior-year figure.
Huntington Ingalls’ Ingalls Shipbuilding segment constructs amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters for the U.S. Navy and boasts a strong portfolio of products. The Newport News segment is involved in the design and construction of nuclear-powered aircraft carriers and submarines. On Feb 23, 2024, HII launched the Virginia-class submarine Massachusetts (SSN 798).
HII’s long-term earnings growth rate is 6.5%. The Zacks Consensus Estimate for 2024 sales implies growth of 2% from the prior-year figure.
General Dynamics’ Marine Systems segment is the leading designer and builder of nuclear-powered submarines and a leader in surface combatant and auxiliary ship design and construction for the U.S. Navy. The two major programs are the Virginia-class and Columbia-class submarines. The unit, comprising 29% of GD’s total revenues in 2023, ended the year with a backlog of $45.9 billion.
GD’s long-term earnings growth rate is 10.8%. The Zacks Consensus Estimate for 2024 sales implies growth of 9.9% from the prior-year figure.
Price Performance
In the past six months, shares of BAE Systems have gained 38% compared with the industry’s 24.4% rise.
Image Source: Zacks Investment Research
Zacks Rank
BAE Systems currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.