Lockheed Martin Corp. (LMT - Free Report) recently secured a $40.6 million contract to supply Modernized Turret kits for the Apache attack helicopter. The deal was awarded by the U.S. Army Contracting Command, Rock Island Arsenal, IL.
Work related to this contract is expected to be completed by Feb 28, 2023.
A Brief Note on Modernized Turret
Lockheed Martin’s Modernized Turret (M-TUR) replaces the legacy Target Acquisition Designation Sight (TADS) system turret assembly that interfaces with Boeing’s (BA - Free Report) Apache AH-64E aircraft and houses the M-TADS/PNVS sensors.
M-TUR increases operational availability and boosts system performance for pilots. The new design incorporates reliability and maintainability improvements for significant life cycle cost savings.
The turret provides reliability and maintainability improvements, resulting in operation and support cost savings of more than $500 million over the life of the Apache.
What Favors Lockheed Martin?
Over the last couple of years, the U.S. Aerospace and Defense space has been witnessing a solid growth, courtesy of President Trump’s decision to discard his predecessor’s budget sequestration policy. This, in turn, ushered in a golden era for prominent defense contractors like Lockheed Martin, which have been witnessing a decent uptick in order growth for their valued military equipment, ever since.
Meanwhile, thanks to growing geopolitical tensions across the globe, the United States has significantly enhanced its surveillance, and the combat-proven helicopters play a crucial role in it. While demand for such military helicopters is rising, so is the need for modernizing them. This must be the rationale behind the latest contract win by Lockheed Martin.
Per a report by MarketWatch, the global military helicopter market is expected to witness a CAGR of 8.4% from 2018 to 2023. This uptick can be attributed to the need for replacing aging fleets and enhancement of capabilities pertaining to disaster relief operations. Such growth prospects can be expected to usher in more helicopter modernization contracts like the latest one for Lockheed Martin.
In a year’s time, shares of Lockheed Martin have gained 18.3% compared with the industry’s 7.5% rise.
Zacks Rank & Key Picks
Lockheed Martin currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are L3Harris Technology Inc (LHX - Free Report) and Wesco Aircraft Holdings, Inc. (WAIR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
L3Harris’ long-term growth estimates currently stand at 8%. The company delivered average positive earnings surprise of 4.21% in the last four quarters.
Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has moved 1.2% up to 85 cents over the past 60 days.
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