Lockheed's Unit Secures Contract to Aid US Navy and Australia

Lockheed Martin Corporation’s LMT business unit, Rotary and Mission Systems, recently clinched a modification contract involving the AEGIS weapon system and DDG-51 warship. The award has been provided by the Naval Sea Systems Command, Washington, D.C.

Details of LMT’s Deal

Valued at $62.6 million, the contract is expected to be completed by June 2028. Per the terms of the deal, Lockheed will support AEGIS modernization, DDG-51 new construction and the allied navy’s new production requirements.

The work related to this deal will be executed in Moorestown, NJ, and Clearwater, FL. Through this contract, the company will serve the U.S. Navy and the government of Australia.

Significance of LMT’s AEGIS

The Aegis Combat System is an advanced naval defense system that combines sensors, weapons and command controls to detect and respond to threats. It can handle multiple missions, including defending air and missile attacks, through its Integrated Air and Missile Defense capability.

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

Growth Prospects for LMT

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.

This is likely to have prompted Mordor Intelligence to forecast a compound annual growth rate of more than 2.5% for the global naval combat systems market 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 Aegis.

LMT’s Integrated Combat System can connect sensors, networks and weapons across a distributed naval force afloat and ashore. On the other hand, its littoral combat ships are resilient and flexible, designed from the keel up to affordably take on new capabilities, including advanced sensors, missiles and cutting-edge cyber systems. Lockheed had a solid backlog of $176 million as of Dec. 31, 2024.

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 9.7%. The Zacks Consensus Estimate for RTX’s 2025 sales indicates year-over-year growth of 4.4%.

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 11.1%. 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, Manta Ray and other navigation systems used in naval combat.

Northrop has a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for NOC’s 2025 sales indicates year-over-year growth of 3%.

LMT Stock Price Movement

LMT shares have dropped 8.1% in the past three months compared with the industry’s 7.2% decline.

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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