Lockheed Martin Corp.’s LMT Rotary and Mission Systems unit recently clinched a modification contract involving the AEGIS combat system. The award has been provided by the Naval Sea Systems Command, Washington, D.C.
Valued at $21.6 million, the contract is expected to be completed by December 2023. Per the terms of the deal, Lockheed will provide capability package development and fielding, system integration and fielding, and in-service sustainment to support current configurations of the AEGIS combat system.
Work related to this contract will be executed in Moorestown, NJ.
Importance of Aegis Combat System
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 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 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 for strengthening their defense landscape. With defense arsenals and ammunitions forming an integral part of an efficient defense system, 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 in the future.
Per Mordor Intelligence projections, the global naval combat system market is expected to witness a CAGR of more than 2.5% over the 2023-2028 period. Such projections further exemplify immense opportunities for Lockheed 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 RTX Corporation RTX, BAE Systems BAESY and Elbit Systems ESLT, as these companies have immense presence in the naval combat space.
RTX’s 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. The company provides warships 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.
RTX’s long-term earnings growth rate is 7.9%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 9.9% from the 2022 reported figure.
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.
BAESY has a long-term earnings growth rate of 14%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 33.6% from the 2022 reported figure.
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 ESLT’s 2023 sales indicates growth of 5.1% from the prior-year reported figure. The consensus estimate for the company’s 2023 earnings implies an increase of 14.4% from the previous year’s reported figure.
Price Movement
In the past year, shares of Lockheed have risen 1% against the industry’s decline of 8.2%.
Image Source: Zacks Investment Research
Zacks Rank
Lockheed 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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