Back to top

Image: Bigstock

Lockheed (LMT) to Deliver Next-Gen Missile Interceptor to US

Read MoreHide Full Article

Lockheed Martin Corporation (LMT - Free Report) recently secured a contract from the U.S. Missile Defense Agency to develop the nation’s Next Generation Interceptor (NGI). This award should bolster LMT’s position in the rapidly expanding missile defense systems market.

Per Reuters, this contract is valued at $17 billion.

Significance of NGI

The NGI is a modern, never-fail weapon system designed to protect the homeland against increasing and evolving ballistic missile threats. It is equipped with kill vehicle technology and combat-proven exo-atmospheric threat intercept experience.

The development of NGI will modernize the United States’ Ground-Based Midcourse Defense program, thereby possessing the ability to defend the nation against an intercontinental ballistic missile attack.

What’s Favoring Lockheed Martin?

Amid the widespread increase in geopolitical tensions worldwide, nations have been strengthening their defense arsenal manifold in recent times. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. The increased missile defense adoption by nations like the United States has been offering prominent missile makers like Lockheed Martin solid growth opportunities.

Notably, Lockheed Martin’s Space Systems unit is the prime contractor for the development, production and support of equipment for missile defense systems like command and control, battle management and communications (C2BMC) system, apart from NGI. C2BMC is an operationally-proven, layered missile defense system that allows commanders to make synchronized decisions about threats at any range, in any phase of flight, from any location in the world.

With such remarkable missile defense products in its portfolio, Lockheed continues to witness solid order flows from the Pentagon and U.S. allies, like the latest one, which should boost revenues for LMT’s Space Systems unit that registered a solid 9% year-over-year growth in 2023.

Growth Prospects

Per the latest report from the Research and Markets firm, the global missile and missile defense systems market is expected to witness a CAGR of 4.82% over the 2024-2029 period.

Such projections exemplify immense opportunities for Lockheed to capitalize on the expanding market. Notably, the company also builds the Next Generation Overhead Persistent Infrared system, which provides the U.S. Space Force with enhanced worldwide missile warning capabilities.

The burgeoning growth prospects of the aforementioned market are also likely to benefit other defense majors like Northrop Grumman (NOC - Free Report) , RTX Corporation (RTX - Free Report) and General Dynamics (GD - Free Report) , which have a well-established position in the missile system market.

Northrop designs and produces missile products, including advanced high-speed propulsion systems, fuses, warheads and controls for air, sea and land-based systems. Currently, it is building an ultramodern 113,000-square-foot complex in West Virginia to manufacture more advanced defense and strike missiles. Upon completion in 2024, the missile integration facility will support the production of up to 300 strike missiles per year, with an expansion capacity to produce 600 per year.

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 is a leading designer, developer, integrator, producer and sustainer of integrated air and missile defense systems. Its product portfolio includes the Advanced Medium-Range Air-to-Air Missile, the Guidance Enhanced Missile, the National Advanced Surface-to-Air Missile System, Tomahawk, Standard Missile 2 and a few more.

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’ Ordnance and Tactical Systems provides missile subsystems in support of U.S. tactical and strategic missiles, provisioning both legacy and next-generation missiles with critical aerostructures, control actuators, high-performance warheads and cutting-edge hypersonic rocket cases. It is the sole producer and system integrator of the 2.75-inch (70mm) Hydra-70 family of rockets.

GD boasts a long-term earnings growth rate of 10.8%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 10% from the 2023 reported figure.

Price Performance

In the past six months, shares of LMT have gained 2.7% against the industry’s 2.1% decline.

Zacks Investment Research
Image Source: Zacks Investment Research

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.

Published in