Lockheed Wins $751M Contract To Support Missile Program

Lockheed Martin Corp.'s LMT business unit, Missile and Fire Control, clinched a contract involving Joint Air-to-Surface Standoff Missile (JASSM). The award has been offered by the Air Force Life Cycle Management Center, Eglin Air Force Base, FL.

Valued at $750.6 million, the contract is projected to be completed by Aug 18, 2027. Per the terms of the deal, Lockheed will supply JASSMs, along with containers, tooling and test equipment, and spares to support the missile program.

Work related to this deal will be executed in Orlando, FL and Troy, AL.

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.

Notably, JASSM is integrated on a handful of the U.S. Air Force's jets like B-1B, B-2, B-52, F-16 and F-15E. Internationally, it is carried on the F/A-18A/B and the F-18C/D aircraft.

Future integration efforts will focus on the U.S. and international versions of Lockheed's F-35 Lightning II fighter aircraft and other international platforms. This indicates the strong demand that this missile enjoys in the domestic as well as international defense space. The latest contract win is a testament to that.

What Lies Ahead?

The global rockets and missiles market, valued at $58.3 billion in 2021, is projected to witness a CAGR of 4.8% to reach $73.8 billion by 2026, per a report by Markets and Markets firm.
Such projections reflect increased growth opportunities for major missile manufacturers like Lockheed, Raytheon RTX, Northrop Grumman (NYSE: NOC) and Boeing BA in the aforementioned market.
Notably, Raytheon offers a variety of combat-proven missile defense systems, including the Patriot missile, Standard Missile-6 (SM-6), Standard Missile-3 (SM-3), Advanced Medium-Range Air-to-Air Missile (AMRAAM), Evolved Seasparrow Missile (ESSM), Tomahawk cruise missile and a few more.
The company boasts a long-term earnings growth rate of 8.3%. The Zacks Consensus Estimate for 2023 sales implies an improvement of 8.3% from the year-ago reported figure.

Northrop manufactures a variety of air, sea and land-based missile systems' propulsion control systems that support the U.S. Missile Defense Agency. It also produces airborne missile warning systems and medium-class solid rocket motors for the U.S. Navy's Trident II Fleet Ballistic Missile program.

NOC boasts a long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for 2023 sales indicates a 4.7% increase from the 2022 reported number.

Boeing's missile defense capabilities provide defensive and strategic systems that protect the homeland and deployed forces. The company's systems within the Integrated Air & Missile Defense portfolio include Arrow 3, which offers regional missile defense capabilities for an effective response to short and medium-range ballistic missiles.

BA boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for 2023 sales implies an improvement of 18% from that registered in 2022.

Price Movement and Zacks Rank

Shares of Lockheed have gained 2.7% in the past year against the industry's decline of 2%.

The company currently carries a Zacks Rank #3 (Hold).

Image by Jacek Dylag on Unsplash