Lockheed's Unit Wins a $131M Contract to Aid Integrated Combat System

Lockheed Martin Corporation’s LMT business unit, Rotary and Mission Systems, recently clinched a modification contract involving the Integrated Combat System (ICS). The award has been provided by the Naval Sea Systems Command, Washington, D.C.

Details of LMT’s Deal

Valued at $131.4 million, the contract is expected to be completed by September 2026. Per the terms of the deal, Lockheed will provide items supporting Systems Engineering and Software Integration (SE/SI) for the Integrated Combat System across the surface force portfolio of the Navy and Coast Guard.

The majority of the work related to this deal will be executed in Moorestown, NJ, and Columbia, MD.

Significance of LMT’s Integrated Combat System

LMT’s ICS is a modern naval combat management system that connects sensors, networks and weapons across a distributed naval force, both afloat and ashore. It is designed to be flexible and easily upgraded, using shared software and technology to quickly add new capabilities to the Surface fleet. ICS helps different forces work together in real time, improving defense and mission success.

Such notable features must have been enabling Lockheed to secure contracts for these systems from the Pentagon and other U.S. allies, the latest contract being an example of that.

Growth Prospects for LMT

According to a report from the Mordor Intelligence firm, rising military conflicts, terrorism and border disputes, along with rapid technological advancements, have driven nations to enhance their naval defense capabilities, making naval combat systems a critical part of their defensive strategies. Fleet modernization programs by armed forces worldwide have also significantly increased the demand for new naval vessels equipped with advanced technologies. Mordor Intelligence also forecasts that the global naval combat systems market will witness a compound annual growth rate of 6.49% during the 2025-2030 period.

Such strong market prospects drive growth opportunities for Lockheed, which offers state-of-the-art naval combat systems in addition to ICS.

Notably, LMT’s Aegis Combat System, a type of ICS, is an advanced naval defense system that combines sensors, weapons and command controls to detect and respond to threats. Moreover, the company is currently working with the U.S. Navy and other partners to deliver software updates to the fleet in real time, with the help of technologically advanced system engineering and software integration.

Opportunities for Other Defense Stocks

Other defense companies that are likely to benefit from the expanding global naval combat systems market are discussed below:

RTX Corporation RTX: It provides advanced electronic and combat systems for the DDG 1000 warship program. Its offerings include a computing environment, modular enclosures, undersea warfare systems, vertical launching systems, advanced guns and integrated power systems.

RTX’s long-term (three to five years) earnings growth rate is 9.1%. The Zacks Consensus Estimate for RTX’s 2025 sales indicates year-over-year growth of 6.1%.

Huntington Ingalls Industries HII: Through its Ingalls Shipbuilding segment, the company has been designing and building amphibious ships, guided missile destroyers and national security cutters for more than 85 years.

HII has a long-term earnings growth rate of 11.8%. The Zacks Consensus Estimate for HII’s 2025 sales indicates year-over-year growth of 3.7%.

Northrop Grumman Corporation NOC: Northrop delivers products like AQS-24B/C Minehunting, Surface Electronic Warfare Improvement Program Block III and other navigation systems used in naval combat.

Northrop has a long-term earnings growth rate of 3.9%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 2.7%.

LMT Stock’s Price Movement

Shares of LMT have risen 12% in the past month compared with the industry’s 4.8% growth.

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

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