雅虎香港財經 Lockheed (LMT) Secures an Army Contract to Aid PAC-3 Program
Lockheed Martin Corp.’s LMT business segment, Missiles and Fire Control (MFC), recently clinched a contract for Phased Array Tracking to Intercept of Target Advanced Capability-3 (PAC-3) software. The award has been offered by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $65.5 million, the contract is expected to be completed by Jun 30, 2026. Work related to this deal will be carried out in Grand Prairie, TX, as well as Bahrain, Germany, Japan, Kuwait, the Netherlands, Poland, Qatar, Romania, Saudi Arabia, South Korea, Sweden, Switzerland and the United Arab Emirates.
What’s Favoring Lockheed?
Increasing geopolitical and socioeconomic turmoil worldwide has prompted nations, both developed and developing, to expand their respective military arsenal, with missiles constituting a significant portion of that inventory.
This, in turn, has been ushering in solid contract flows for major missile makers like Lockheed. The latest contract win is a testament to that.
Notably Lockheed’s MFC unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. In particular, its PAC-3 is an advanced defensive missile, which with its unmatched Hit-to-Kill capabilities, defends against advanced threats including tactical ballistic missiles, cruise missiles, hypersonic missiles and aircraft.
To this end, it is imperative to mention that in 2023, 15 nations chose PAC-3 Cost Reduction Initiative and PAC-3 Missile Segment Enhancement (MSE) to provide missile defense capabilities. This surely reflects the solid demand that PAC-3 enjoys in the global missile market.
LMT’s Growth Prospects
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 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.
Therefore, the growth prospect for the missile and missile defense systems market remains solid. To this end, the Mordor Intelligence firm projects the market to witness a CAGR of 5% over the 2024-2029 period.
Such a solid growth prospect, offered by the aforementioned market, positions Lockheed to benefit substantially in the coming days. Notably, to further enhance the market reach of PAC-3 missiles, in May 2024, Lockheed launched a PAC-3 MSE interceptor from an MK-70 containerized launch platform to engage a cruise missile target in flight. This test marked the first time PAC-3 MSE was launched in this configuration, utilizing the Virtualized Aegis Weapon System to intercept a live target. Such modernization efforts in tandem with growing demand for missiles can be expected to fetch more contract wins for PAC-3 missile, thereby bolstering the top-line performance of LMT’s MFC unit.
Opportunities for Peers
The solid growth prospect offered by the missile and missile defense systems market should also bode well for other defense contractors, as mentioned below, which are prominent missile makers, apart from LMT.
RTX Corp RTX: It offers a variety of combat-proven missile defense systems, including the Patriot missile, Standard Missiles, Advanced Medium-Range Air-to-Air Missile, Evolved Seasparrow Missile, Tomahawk cruise missile and a few more. To keep up with its growing demand for a wide variety of missiles, RTX broke ground on a $115 million worth, 26,000-square-foot expansion of its Redstone Raytheon Missile Integration Facility in April 2024.
RTX boasts a long-term earnings growth rate of 10.6%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 6.2% from the 2023 reported figure.
Northrop Grumman NOC: It is a prominent developer of missile systems and counter systems, including strategic deterrents, as well as subsystems and components. Its product portfolio includes the Integrated Air and Missile Defense Battle Command System, 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 8.7%. The Zacks Consensus Estimate for its 2024 sales implies an improvement of 4.6% from the 2023 reported figure.
The Boeing Company BA: Boeing-built and supported air and missile defense systems have been protecting the United States, its allies and international partners against threats ranging from intercontinental ballistic missiles to hostile aircraft, for almost 25 years. Its product portfolio includes the Aegis Ballistic Missile Defense, the Avenger Air Defense System, the Ground-Based Midcourse Defense and a few other missiles.
BA boasts a long-term earnings growth rate of 25.5%. The Zacks Consensus Estimate for its 2024 sales suggests an improvement of 2% from the 2023 reported figure.
Price Movement
Shares of Lockheed have risen 2.8% in the past year against the industry's decline of 12.9%.
Image Source: Zacks Investment Research
Zacks Rank
The company currently carries 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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