BAE Systems Secures a Contract for Amphibious Combat Vehicles

BAE Systems Inc.’s BAESY business unit, BAE Systems Land & Armaments LP, recently clinched a modification contract involving Amphibious Combat Vehicles (ACV). The award has been offered by the Marine Corps Systems Command, Quantico, VA.

Details of the Deal

Valued at $184.4 million, the contract is expected to be completed in March 2028. Per the terms of the deal, BAE Systems will provide 30 full-rate production ACV medium caliber cannon mission role variants along with associated production, fielding and support services and spare parts.

The majority of the work related to the contract will be carried out in York, PA.

Growth Prospects for BAESY

According to a report from the Mordor Intelligence firm, nations across the globe are fortifying their defense spending on military weapons and arsenals as they look to strengthen their defense capabilities. This also includes augmented spending on navy ships for enhanced sea warfare capabilities. Mordor Intelligence also forecasts that the naval vessels market will witness a compound annual growth rate of 6.46% during the 2025-2030 period.

Such increased spending tends to benefit BAE Systems as its Platforms & Services business manufactures and upgrades combat vehicles, weapons and munitions, and provides naval ship repair.

BAE Systems’ ACV is designed in a way that can fulfill the complex mission objective of deploying Marines from the ship to the shore. It represents a unique mix of true open-ocean amphibious capability, land mobility, survivability and payload. It exhibits tremendous growth potential to accommodate the evolving operational needs of the United States Marine Corps (USMC). The ACV family includes the ACV-C, ACV-30 and ACV-R.

Such features may have attracted the USMC and thus resulted in multiple contract wins for BAE Systems.

Opportunities for Other Defense Stocks

Some other defense players that can gain from the expanding naval vessel market are discussed below.

Lockheed Martin LMT: Lockheed’s Rotary and Mission Systems (RMS) unit supports integrated warfare systems and sensors programs such as the AEGIS Combat System, the Littoral Combat Ship (LCS) and Multi-Mission Surface Combatant for the U.S. Navy and other allies.

LMT’s long-term (three-to five-year) earnings growth rate is 12.4%. The Zacks Consensus Estimate for 2025 sales implies growth of 4.7% from the prior-year figure.

Huntington Ingalls Industries HII: Huntington Ingalls’ Ingalls Shipbuilding segment constructs amphibious assault ships, expeditionary warfare ships, surface combatants and national security cutters for the U.S. Navy and boasts a strong portfolio of products. The Newport News segment is involved in the design and construction of nuclear-powered aircraft carriers and submarines.

HII’s long-term earnings growth rate is 12.8%. The Zacks Consensus Estimate for 2025 sales implies growth of 4.5% from the prior-year figure.

General Dynamics GD: General Dynamics’ Marine Systems segment is the leading designer and builder of nuclear-powered submarines and a leader in surface combatant and auxiliary ship design and construction for the U.S. Navy.

GD’s long-term earnings growth rate is 12.8%. The Zacks Consensus Estimate for 2025 sales implies growth of 8.9% from the prior-year figure.

Price Performance

In the past year, shares of BAE Systems have gained 34.5% compared with the industry’s 13.5% growth.

Zacks Rank

BAE Systems currently has 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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