Lockheed Martin Corp.’s LMT business segment, Rotary and Missions Systems, recently clinched a modification contract involving its Surface Electronic Warfare Improvement Program. The award has been provided by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal Secured by LMT
Valued at $113.6 million, the contract is projected to be completed by October 2026. Per the terms of the deal, Lockheed Martin will be engaged in full-rate production of Surface Electronic Warfare Improvement Program AN/SLQ-32(V)6 and AN/SLQ-32C(V)6 systems.
The majority of the work related to this contract will be performed in Liverpool, NY.
What’s Favoring the LMT Stock?
As global defense spending escalates, particularly in response to the growing threats posed by anti-ship missiles and other naval challenges, the need for sophisticated surveillance and countermeasure capabilities has become paramount. Amid this, Lockheed Martin's Surface Electronic Warfare Improvement Program (“SEWIP”) plays a crucial role in addressing these demands.
LMT’s SEWIP enhances the electronic warfare capabilities of the U.S. Navy's surface fleet by offering advanced anti-ship missile defense, counter-targeting and counter-surveillance capabilities. This program has become a critical component of the U.S. Navy's electronic warfare strategy, allowing ships to detect and respond to threats with greater speed and accuracy. The ability to conduct both littoral and open-ocean electronic surveillance makes SEWIP a versatile and indispensable tool in modern naval operations.
Looking ahead, the demand for SEWIP is expected to grow significantly as the global electronic warfare market expands, with a projected compound annual growth rate (CAGR) of 12.5% from 2023 to 2028 (as per a report by the Markets and Markets firm).
Lockheed Martin's proven track record with SEWIP and its continuous upgrades, including the integration of new defensive technologies and enhanced capabilities, position the company to secure additional contracts and increase revenues from this program.
Moreover, Lockheed Martin's development of the Advanced Off-Board Electronic Warfare (“AOEW”) system further strengthens its market position. The AOEW system, deployed on Seahawk helicopters, provides the U.S. Navy with advanced anti-ship missile detection and countermeasure capabilities, working in conjunction with SEWIP to offer a comprehensive electronic warfare solution.
These innovations further strengthen Lockheed Martin's role as a leading provider of cutting-edge electronic warfare systems in an increasingly competitive defense market.
Opportunities for LMT’s Peers
Other defense contractors that are expected to reap the benefits of the expanding EW market are discussed below:
L3Harris Technologies LHX: It manufactures a handful of electronic warfare (EW) systems like AN/ALQ-214 (IDECM) F/A-18 Countermeasure System, Viper Shield AN/ALQ-254(V)1 All-digital Electronic Warfare Suite, AN/ALQ-161A B1-B Countermeasure System, AN/ALQ-172 B-52 and C-130 Self Protection System and CREW Vehicle Receiver/Jammer (CVRJ).
The long-term growth rate of L3 Harris Technologies is pegged at 9.3%. The consensus estimate for LHX’s 2024 sales indicates a 10% improvement from the prior year's reported figure.
Northrop Grumman NOC: It has been providing Naval Airborne Electronic Warfare solutions for more than 55 years and is the Airborne Electronic Attack System Integrator for the U.S. Navy warfighter. Some of its EW systems include the ALQ-251 radio frequency countermeasures system and the AN/APR-39 Radar Warning Receiver/Electronic Warfare Management System.
Northrop boasts a solid long-term earnings growth rate of 8.7%. The consensus estimate for NOC’s 2024 sales indicates a 5.4% improvement from the prior year's reported figure.
General Dynamics GD: It has been performing as the Lead Systems Integrator for SEWIP Block 1. Its SEWIP, a spiral-block development program, provides an immediate improvement for the legacy surface ship electronic warfare detection and countermeasure system, the AN/SLQ-32.
General Dynamics boasts a solid long-term earnings growth rate of 12.6%. The consensus estimate for GD’s 2024 sales indicates a 13.5% improvement from the prior year's reported figure.
Price Movement
Shares of LMT have risen 23.9% in the past year against the industry's decline of 1.4%.
Image Source: Zacks Investment Research
LMT’s Zacks Rank
LMT 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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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
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