Lockheed's Arm Secures a $198M Contract to Support Sonar Systems

Lockheed Martin Corporation’s (LMT) unit, Rotary and Mission Systems, recently clinched a modification contract to provide engineering design, development and production support for Sound Navigation and Ranging (Sonar) systems. The award has been offered by the Naval Sea Systems Command, Washington, D.C.

Valued at $197.5 million, the contract is expected to be completed by September 2026. The majority of the work related to this deal will be executed in Manassas, VA, and Clearwater, FL.

LMT Stock’s Growth Prospects

With the rapid rise of geopolitical tensions in recent years, governments worldwide have increased their investments in military arsenals, including sonars. This demand is fueled by the need for high-resolution seabed mapping, enhanced underwater surveillance and next-generation sonar-equipped vessels.

This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 4.4% for the global sonar systems market during the 2025-2030 time period.

Such solid growth prospects of the aforementioned market should benefit Lockheed, a key player in providing advanced sonar technology systems to the U.S. Navy and allied forces. As an industry forerunner in anti-submarine warfare solutions, the company supplies sonar for submarines and surface ships, thereby ensuring enhanced underwater surveillance. LMT is well-known for its submarine sonar system called ARCI (Acoustic Rapid Commercial off-the-shelf Insertion), which is currently installed on the entire U.S. submarine fleet.

With decades of expertise, LMT continues to secure contracts for next-generation sonar upgrades. The latest contract is an example of that.

Opportunities for Other Defense Players

Other defense companies that are likely to enjoy the perks of the expanding global sonar systems market have been discussed below:

RTX Corporation (RTX): Through its Raytheon unit, the company develops advanced sonar systems for naval applications, including the AN/AQS-20C mine-hunting sonar suite and the AN/ASQ-235 Airborne Mine Neutralization System.

RTX has a long-term (three to five years) earnings growth rate of 9.1%. The Zacks Consensus Estimate for RTX’s 2025 sales indicates year-over-year growth of 4.7%.

Northrop Grumman Corporation (NOC): It provides integrated sonar solutions for submarines and surface ships, enhancing anti-submarine warfare capabilities. It also provides a high-performance minehunting system AQS-24B/C, which offers significantly improved image resolution and real-time sonar processing.

Northrop has a long-term earnings growth rate of 3.3%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 2.8%.

General Dynamics (GD): Through its subsidiary General Dynamics Mission Systems, the company provides advanced sonar and undersea systems for Virginia-class, Ohio-class and Columbia-class submarines.

GD has a long-term earnings growth rate of 10%. The Zacks Consensus Estimate for GD’s 2025 sales indicates year-over-year growth of 5.8%.

LMT Stock’s Price Movement

Shares of Lockheed have gained 0.1% in the past year compared with the industry’s 19.7% growth.

LMT’s Zacks Rank

LMT currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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