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Lockheed (LMT) Secures $195M Deal to Support MK 41 VLS

Lockheed Martin Corp.’s LMT business unit, Rotary and Mission Systems, clinched a contract involving MK 41 Vertical Launching System (VLS). The award has been offered by the Naval Sea Systems Command, Washington, DC.

Details of the Deal

Valued at $194.7 million, the contract is expected to be completed by June 2027. Per the terms of the deal, Lockheed will provide MK 41 VLS modules and ancillary hardware to support MK 41 VLS production requirements.
The cumulative value of this contract will amount to $642.9 million, if options in the deal are exercised.  A major portion of work related to this deal will be carried out in Moorestown, NJ and Indianapolis, IN.

The contract will serve the U.S. Navy, along with the governments of Canada and Australia.

MK 41 VLS Attributes

Lockheed’s MK 41 VLS is the only launching system that can simultaneously communicate with weapon control systems and missiles of every warfighting mission area: anti-aircraft, anti-surface, anti-submarine, ballistic missile defense and land attack. The system is designed to accept any missile into any cell — a capability that provides unparalleled flexibility.

With more than 4,300 successful missile firings, the MK 41 VLS is a combat-proven launcher that eliminates problems associated with conventional and single-purpose launchers on surface ships.

Such features reflect the solid demand that Lockheed’s MK 41 VLS enjoys in the missile market. Nations across the globe are aggressively expanding their respective military arsenal, with missiles constituting a significant portion of that inventory.

What Lies Ahead?

The global rockets and missiles market, valued at $58.3 billion in 2021, is projected to witness a CAGR of 4.8% to reach $73.8 billion by 2026, per a report by Markets and Markets firm.

Such projections reflect increased growth opportunities for major manufacturers of missiles and associated products like Lockheed, Raytheon RTX, 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.

The company boasts a long-term earnings growth rate of 8.3%. The Zacks Consensus Estimate for 2023 sales implies an improvement of 8.3% from the year-ago reported figure.

Northrop Grumman manufactures a variety of air, sea and land-based missile systems’ propulsion control systems that support the U.S. Missile Defense Agency. It also produces airborne missile warning systems and medium-class solid rocket motors for the U.S. Navy's Trident II Fleet Ballistic Missile program.
NOC boasts a long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for 2023 sales indicates a 4.7% increase from the 2022 reported number.

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 for an effective response to short and medium-range ballistic missiles.

BA boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for 2023 sales implies an improvement of 18% from that registered in 2022.

Price Movement and Zacks Rank

Shares of Lockheed have gained 2.2% in the past year against the industry’s decline of 1.6%.

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Zacks Investment Research

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The company 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 Boeing Company (BA) : Free Stock Analysis Report

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