Lockheed (LMT) Wins $818M Contract to Manufacture JASSM

Lockheed Martin Corp. LMT recently won a contract for manufacturing the 17th and 18th lots of Joint Air-to-Surface Standoff Missile (JASSM). Work related to the deal will be executed in Orlando, FL.

Valued at $818.2 million, the contract was awarded by the Air Force Life Cycle Management Center, Eglin Air Force Base, FL.

The contract is scheduled to be completed by Oct 31, 2024.

A Brief Note on JASSM

The JASSM is a long range, conventional, stealthy, air-launched ground attack cruise missile designed for the Air Force and international partners with a range of 223-621.4 miles. JASSM was designed to destroy high-value, well-defended, fixed and re-locatable targets. The threshold integration aircraft were F-16, B-52, and F/A-18 E/F.

The airframe design was to be compatible with all intended JASSM launch platforms — the B-52H, F-16C/D, F/A-18E/F, F-15E, F-117, B-1B, B-2, P-3C and S-3B.

What’s Favoring Lockheed Martin?

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.

As one of the major missile makers in the United States, Lockheed Martin stands out among its peers by virtue of its broadly-diversified programs and strong order bookings. Notably,fourth-quarter 2019, revenues at its Missiles and Fire Control unit came in at $2.77 billion, increasing 14.1% year over year, driven by higher sales from the tactical and strike missiles programs.

Considering the latest contract win, we expect this unit of Lockheed to show similar solid performance in the days ahead.

Looking Ahead

The global missiles and missile defense Systems market, valued at $55 billion in 2018, is projected to witness CAGR of 6%, to reach $93.0 billion by 2027(as per Research and Markets firm’s report).

Such projections reflect increased growth opportunities for major missile-players like Lockheed Martin, Raytheon RTN, Northrop Grumman 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.

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

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 to enable an effective response to short and medium-range ballistic missiles. It also produces the Missile Seeker for PAC-3 that uses hit-to-kill technology to defeat the entire spectrum of tactical ballistic missile cruise missiles and hostile aircraft.

Price Performance

Lockheed Martin’s stock has gained 11.4% in the past year against the industry’s 30.6% decline.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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