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Lockheed (LMT) Secures a $861M Contract to Build HIMARS
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Lockheed Martin Corp. (LMT - Free Report) recently clinched a contract involving High Mobility Artillery Rocket Systems (HIMARS). The award has been provided by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $861.3 million, the contract is expected to be completed by May 31, 2026. Per the terms of the deal, Lockheed will manufacture HIMARS and provide the supporting services associated with it.
What’s Favoring Lockheed?
Nations are reinforcing their military capabilities to strengthen their defense structure in the growing threat environment. In this context, increased spending has been witnessed on missile capabilities, resulting in a significant order inflow for companies like Lockheed Martin, which enjoy a dominant position in the development of missiles.
To this end, it is imperative to mention that LMT’s HIMARS is the most technically advanced, affordable and sustainable artillery solution that provides cutting-edge technology on an indigenous platform. HIMARS provides unmatched long-range mobile firepower to support Joint All-Domain Operations. It can launch the entire Multiple Launch Rocket System family of munitions.
Such remarkable features of the HIMARS are likely to have been boosting its demand significantly. This can be gauged from the fact that Lockheed has already increased the production capacity of HIMARS from 48 per year to 60 per year.
Growth Prospect
The global peace index reflects an unstable environment worldwide with the Russia-Ukraine war continuing for more than two years now, in addition to the ongoing hostility prevalent in different parts of the Middle East. This has set the stage for the defense sector to witness rising demand for military products, particularly missiles, as nations worldwide strive to protect their borders from unprecedented attacks. As the demand for missiles is on the rise, so is the demand for missile launchers like HIMARS.
Therefore, the growth prospect for the missile and missile defense systems market remains solid. To this end, the Mordor Intelligence firm projects the missile and missile defense systems market to witness a CAGR of 5% over the 2024-2029 period.
LMT’s proficiency in manufacturing missiles and associated missile launchers, particularly that of HIMARS, positions it favorably to capitalize on the growth opportunities offered by the aforementioned market. The fact that Lockheed Martin remains on track to double the production of its HIMARS to 96 per year by the end of 2024, makes us confident that the company will witness more order flows for this product, like the latest one. Such contract wins, in turn, are likely to boost revenue growth for the company’s MFC unit, which witnessed a solid 25.3% year-over-year growth in its top line in the first quarter.
Opportunities for Peers
LMT apart, other prominent defense contractors that stand to benefit from the expanding missile and missile defense systems market are as follows:
Northrop Grumman (NOC - Free Report) : Northrop is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. Its product portfolio includes the Integrated Air and Missile Defense Battle Command System, the Guided Multiple Launch Rocket System propulsion and warhead subsystems, the Hypersonic Attack Cruise Missile, the Advanced Anti-Radiation Guided Missile and a few other combat-proven products that support missile defense systems.
NOC boasts a long-term earnings growth rate of 9.9%. The Zacks Consensus Estimate for Northrop’s 2024 sales indicates an improvement of 4.6% from the 2023 reported figure.
General Dynamics (GD - Free Report) : General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It is a key supplier of major strategic and tactical missile programs ranging from warheads to missile housings, structural components to solid rocket motor cases.
GD has a long-term earnings growth rate of 11%. The consensus estimate for General Dynamics’ 2024 sales indicates an improvement of 10.5% from the 2023 reported figure.
RTX Corp. (RTX - Free Report) : RTX’s business unit, Missiles and Defense, is a prominent U.S. missile maker. Its portfolio includes the AIM-9X Sidewinder missile, the AIM-9X Block II missile, RAM-guided missile weapon system, etc. In a partnership with BAE Systems, RTX has built the Excalibur artillery projectile, which increases precision, minimizes collateral damage and reduces the logistical burden for artillery forces.
RTX boasts a long-term earnings growth rate of 10.3%. The Zacks Consensus Estimate for its 2024 sales indicates an improvement of 6.2% from the 2023 reported figure.
Price Movement
In the past year, shares of Lockheed Martin have risen 3.4% against the industry’s 7.8% decline.
Image: Bigstock
Lockheed (LMT) Secures a $861M Contract to Build HIMARS
Lockheed Martin Corp. (LMT - Free Report) recently clinched a contract involving High Mobility Artillery Rocket Systems (HIMARS). The award has been provided by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $861.3 million, the contract is expected to be completed by May 31, 2026. Per the terms of the deal, Lockheed will manufacture HIMARS and provide the supporting services associated with it.
What’s Favoring Lockheed?
Nations are reinforcing their military capabilities to strengthen their defense structure in the growing threat environment. In this context, increased spending has been witnessed on missile capabilities, resulting in a significant order inflow for companies like Lockheed Martin, which enjoy a dominant position in the development of missiles.
To this end, it is imperative to mention that LMT’s HIMARS is the most technically advanced, affordable and sustainable artillery solution that provides cutting-edge technology on an indigenous platform. HIMARS provides unmatched long-range mobile firepower to support Joint All-Domain Operations. It can launch the entire Multiple Launch Rocket System family of munitions.
Such remarkable features of the HIMARS are likely to have been boosting its demand significantly. This can be gauged from the fact that Lockheed has already increased the production capacity of HIMARS from 48 per year to 60 per year.
Growth Prospect
The global peace index reflects an unstable environment worldwide with the Russia-Ukraine war continuing for more than two years now, in addition to the ongoing hostility prevalent in different parts of the Middle East. This has set the stage for the defense sector to witness rising demand for military products, particularly missiles, as nations worldwide strive to protect their borders from unprecedented attacks. As the demand for missiles is on the rise, so is the demand for missile launchers like HIMARS.
Therefore, the growth prospect for the missile and missile defense systems market remains solid. To this end, the Mordor Intelligence firm projects the missile and missile defense systems market to witness a CAGR of 5% over the 2024-2029 period.
LMT’s proficiency in manufacturing missiles and associated missile launchers, particularly that of HIMARS, positions it favorably to capitalize on the growth opportunities offered by the aforementioned market. The fact that Lockheed Martin remains on track to double the production of its HIMARS to 96 per year by the end of 2024, makes us confident that the company will witness more order flows for this product, like the latest one. Such contract wins, in turn, are likely to boost revenue growth for the company’s MFC unit, which witnessed a solid 25.3% year-over-year growth in its top line in the first quarter.
Opportunities for Peers
LMT apart, other prominent defense contractors that stand to benefit from the expanding missile and missile defense systems market are as follows:
Northrop Grumman (NOC - Free Report) : Northrop is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. Its product portfolio includes the Integrated Air and Missile Defense Battle Command System, the Guided Multiple Launch Rocket System propulsion and warhead subsystems, the Hypersonic Attack Cruise Missile, the Advanced Anti-Radiation Guided Missile and a few other combat-proven products that support missile defense systems.
NOC boasts a long-term earnings growth rate of 9.9%. The Zacks Consensus Estimate for Northrop’s 2024 sales indicates an improvement of 4.6% from the 2023 reported figure.
General Dynamics (GD - Free Report) : General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It is a key supplier of major strategic and tactical missile programs ranging from warheads to missile housings, structural components to solid rocket motor cases.
GD has a long-term earnings growth rate of 11%. The consensus estimate for General Dynamics’ 2024 sales indicates an improvement of 10.5% from the 2023 reported figure.
RTX Corp. (RTX - Free Report) : RTX’s business unit, Missiles and Defense, is a prominent U.S. missile maker. Its portfolio includes the AIM-9X Sidewinder missile, the AIM-9X Block II missile, RAM-guided missile weapon system, etc. In a partnership with BAE Systems, RTX has built the Excalibur artillery projectile, which increases precision, minimizes collateral damage and reduces the logistical burden for artillery forces.
RTX boasts a long-term earnings growth rate of 10.3%. The Zacks Consensus Estimate for its 2024 sales indicates an improvement of 6.2% from the 2023 reported figure.
Price Movement
In the past year, shares of Lockheed Martin have risen 3.4% against the industry’s 7.8% decline.
Image Source: Zacks Investment Research
Zacks Rank
Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.