Lockheed Martin Wins $36M Deal to Aid Japan's Aegis System

Lockheed Martin Corp.’s LMT Rotary and Mission Systems (RMS) business unit recently won a $35.6-million hybrid contract for supporting the Aegis weapon system — J7 baseline — for Japan’s maritime Self-Defense Force (JMSDF). The contract has been awarded by the Missile Defense Agency, Dahlgren, VA.

Per the contract terms, Lockheed Martin’s RMS unit will perform Aegis FMS Baseline J7.B development and SPY-7(V) 1 radar production, integration and test planning support for the JMSDF. Work related to the deal will be performed in Moorestown, NJ, and is expected to conclude by Jul 31, 2021.

A Brief Note on Aegis System & J7 Baseline

Aegis is the world’s most advanced combat system that can simultaneously destroy land targets, submarines and surface ships, along with providing protection from aircraft, cruise missiles and ballistic missiles. The computer-based command and decision providing ability is the key element of the Aegis combat system. The Aegis Ballistic Missile Defense (BMD) system is the primary sea-based component of the U.S. missile defense system.

In a joint research program conducted by the United States and Japan, Lockheed Martin is developing an Aegis Baseline 9.C2 (BMD 5.1) variant computer program, referred to as J7, for deployment on Japan’s Aegis destroyers.

What Favors Lockheed Martin?

Heightened geopolitical tensions and rising terrorism across the globe have compelled nations to fortify their military arsenal, with missile systems constituting an integral part of it. As Japan too looks to defend against any possible attacks by North Korea and other regional rivals, including China in the future, its reliance on the Aegis combat system is a big boost for Lockheed Martin's growth in the region.

The United States, being the largest exporter of military weaponry worldwide, follows a similar strategy. This is evident from the provision of $619 million in the U.S. fiscal 2021 defense budget to purchase the Aegis Ballistic Missile Defense systems.

Per a report by Fortune Business Insights, the global rocket and missile market is projected to grow from $52.5 billion in 2019 to $71.8 billion by 2027, at a CAGR of 4.52%, propelled by a rapid surge in demand. Such projections will certainly benefit prominent missile maker like Lockheed Martin in the days to come.

Other Missile Makers Poised to Benefit

Such stellar budgetary proposals and growth projections are poised to benefit other prominent missile makers in the nation as well, such as Northrop Grumman NOC, General Dynamics GD and Raytheon Technologies RTX.

Notably, Northrop Grumman’s missile defense program includes AGM-88E advanced anti-radiation guided missiles (AARGM), Ground Based Strategic Deterrent (GBSD) weapon system and rocket propulsion systems.

General Dynamics’ Ordnance and Tactical Systems are the system integrators of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases, and launch tubes for tactical and strategic missiles.

Similarly, Raytheon Technologies' missile defense capabilities include Patriot GEM-T missiles; SM-6 missile destroys cruise missiles and ballistic missiles, NASAMS, among others.

Zacks Rank & Price Performance

Lockheed Martin carries a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last six-month period, Lockheed Martin’s shares have gained 3.4% compared with the industry’s 2.5% growth.

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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.