Lockheed Martin (LMT) Wins Deal to Support Aegis Weapon System
Lockheed Martin Corporation LMT recently clinched a modification contract to support the Aegis Weapon System (“AWS”) for AWS baselines. The deal was awarded by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $17.6 million, the contract is expected to be complete by May 2023. The contract involves providing the ship integration and test support of the AWS for AWS baselines through Advanced Capability Build (ACB)16. The majority of the work related to the deal will be performed in Moorestown, NJ.
Importance of AWS
The Aegis Combat System is the U.S. Navy’s most modern surface combat system. It has been designed as a complete system, most suitable for military missions, and includes the missile launching element, the computer programs, the radar and the displays that are fully integrated to work together. This makes the AWS the first fully integrated combat system built to defend against advanced air and surface threats.
Due to its remarkable features that are well-suited for any military mission, Lockheed Martin continues to witness a steady inflow of orders involving this combat system. The latest contract win is a testament to the same. This, in turn, should bolster LMT’s revenues from the combat system.
Growth Prospects
The Russia-Ukraine warfare has led many nations to increase their defense spending to strengthen their defense landscape, with defense arsenals and ammunitions forming an integral part of an efficient defense system, and thus defense products have been witnessing a surge in demand lately. In this context, the demand for an efficient combat system that can augment naval sea warfare capabilities may also increase manifold going forward.
Per Mordor Intelligence projections, the global naval combat system market is expected to witness a CAGR of 2.5% over the 2022-2027 period. Such projections further exemplify immense opportunities for Lockheed Martin to capitalize on the expanding market with its state-of-the-art combat system.
Such abounding growth projections will also benefit prominent defense majors, namely Raytheon TechnologiesRTX, BAE Systems BAESY and Elbit Systems ESLT, as these stocks have immense presence in the naval combat space.
Raytheon Technologies’Missiles & Defense serves as the prime mission systems equipment integrator for all electronic and combat systems for the DDG 1000 program, America’s next-generation combat ship. Raytheon provides a ship with a computing environment, electronic modular enclosures, an integrated undersea warfare system, an MK57 vertical launching system, an advanced gun system and an integrated power system.
Raytheon’s long-term earnings growth rate is pegged at 10.4%. Shares of RTX have returned 4.7% value to investors in the past year.
BAE Systems designs and manufactures naval ships and submarines as well as state-of-the-art combat systems and equipment. Its INTeACT combat management systems provide mission-critical capabilities and a vital advantage in combat.
The long-term earnings growth rate of BAESY is pegged at 9.3%. Shares of BAE Systems have rallied 10.9% in the past year.
Elbit Systems has more than three decades of experience in the design and development of high-performance naval combat systems, including shipboard combat management systems, assuring information dominance over potential enemies, supporting a Common Tactical Picture, shortening decision cycles and executing rapid, accurate weapon engagement. Its submarine ELINT systems can detect and recognize threats under dense electromagnetic conditions.
The Zacks Consensus Estimate for 2022 sales suggests a growth rate of 4.1% from the prior-year reported figure. Shares of ESLT have rallied 42.6% in the past year.
Price Movement
In the past year, shares of LockheedMartin have rallied 17.5% against the industry’s fall of 35.1%.
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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.
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