BAE Systems Clinches $1.7B APKWS Production Contract From US Navy

BAE Systems plc BAESY recently secured a new five-year indefinite delivery, indefinite quantity contract from the U.S. Navy to produce Advanced Precision Kill Weapon System (“APKWS”) laser-guidance kits, providing U.S. forces with tens of thousands of additional low-cost precision munitions. The contract is valued at up to $1.7 billion and includes an initial $322 million order.

This agreement supports rising domestic and international demand and allows the Navy to procure APKWS kits over the five-year term. The guidance kits are available to all U.S. armed forces and allied nations through foreign military sales.

BAESY’s Leadership in APKWS Production

BAE Systems has been producing its APKWS guidance kit at full rate for more than 12 years, enabling U.S. forces and allied militaries to engage diverse targets at a fraction of the cost of traditional precision munitions. The company relies on a strong supply chain and established manufacturing capabilities to deliver these kits quickly and reliably.

BAE Systems’ APKWS laser-guidance kit converts standard 2.75-inch unguided rockets into precision-guided munitions. The combat-proven system allows operators to strike a wide range of soft and armored, stationary or moving targets while minimizing collateral damage. Its accuracy against both air and ground targets makes it suitable for numerous mission types. The highly adaptable kit can be deployed from rotary- and fixed-wing aircraft, as well as unmanned aerial vehicles, static and mounted ground platforms, and maritime vessels.

To date, BAE Systems has delivered more than 50,000 APKWS guidance kits. The company’s recent investment of more than $100 million in infrastructure upgrades to expand production further underscores the strong and sustained global demand for APKWS within the defense industry.

Growth Potential for BAESY & Other Defense Stocks

Steadily rising demand for rockets and missiles amid enhanced hostilities worldwide must have prompted the Mordor Intelligence firm to project the rocket and missile market to register a CAGR of 5.29% during 2025-2030. Such strong growth trends underscore significant opportunities for leading market players such as BAE Systems, Lockheed Martin Corp. LMT, The Boeing Company BA and RTX Corporation RTX.  

Lockheed Martin’s Missiles and Fire Control unit develops, manufactures, and sustains advanced missiles and rockets for military forces worldwide. Its MLRS Family of Munitions delivers a broad array of precision-strike rockets and missiles, continually upgraded to meet the evolving requirements of modern warfighters.

LMT boasts a long-term (three to five years) earnings growth rate of 12.35%. The Zacks Consensus Estimate for 2025 sales stands at $74.40 billion, which calls for an increase of 4.7%.

Boeing’s Precision Engagement Systems portfolio features a variety of battle-tested solutions. Its Joint Direct Attack Munition is an affordable guidance kit that converts conventional free-fall bombs into highly accurate, smart precision weapons.

BA boasts a long-term earnings growth rate of 31.33%. The Zacks Consensus Estimate for 2025 sales stands at $86.83 billion, which calls for an increase of 30.5%.

RTX’s business unit, Raytheon, is a major producer of advanced military rocket and missile systems. Its SM-3 interceptor is a highly capable defensive weapon engineered to detect, track and destroy short to intermediate-range ballistic missiles.

RTX’s long-term earnings growth rate is 10.35%. The Zacks Consensus Estimate for 2025 sales stands at $87.04 billion, which suggests a rise of 7.8%.

BAESY Stock Price Movement

In the past year, BAE Systems shares have risen 49% compared with the industry’s growth of 25.3%.

BAESY’s Zacks Rank

BAE Systems 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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