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Lockheed Martin's Unit Wins FMS Contract to Support AEGIS

Zacks Equity Research

Lockheed Martin Corp’s. LMT Rotary and Mission Systems (RMS) unit recently clinched a $37.5-million modification contract for offering additional Aegis combat system engineering, computer program maintenance, in-country support, staging support and implementation studies. The company will provide these services to the Japan Maritime Self-Defense Force, the Republic of Korea Navy, the Spanish Armada, the Royal Australian Navy and the Royal Norwegian Navy under the Foreign Military Sales (FMS) Aegis shipbuilding program.

Details of the Deal

Per the deal terms, the Aegis FMS programs that willto be supported include the Japan Maritime Self-Defense Force’s Kongo and Atago class ships, Republic of Korea Navy KDX III class ships, Spanish Armada F-100 and F-110 program, Royal Norwegian Navy F310 class ships and Royal Australian Navy Hunter and Hobart class ships.

The contract was awarded by the Naval Sea Systems Command, Washington, D.C. Majority of the work related to the deal will be performed in Moorestown, NJ, and is expected to be completed by September 2020.

What is AEGIS CSEA?

As the developer of the Aegis Combat System, Lockheed Martin continues its 40-year legacy as the AEGIS combat system engineering agent (CSEA) for the U.S. Navy. The AEGIS CSEA is responsible for providing combat system engineering services, including the design, development and life cycle support, for to all AEGIS-equipped ships across the globe.

What Favors Lockheed Martin?

Heightened geopolitical tensions and rising terrorism across the globe have compelled nations to strengthen their military arsenal, with missile systems constituting an integral part of it. The United States, being the largest exporter of military weaponry worldwide, follows a similar strategy. This is evident from the provision of $1.1 billion to purchase AEGIS Ballistic Missile Defense systems in the proposed U.S. fiscal 2021 defense budget.

Further, per the Markets and Markets research firm, the global rocket and missile market is projected to rise to $70 billion by 2022, from 2017, at a CAGR of 4.74%, led by a rapid rise in demand. Such projections will certainly benefit prominent missile maker, Lockheed Martin, going ahead.

Other Missile Makers Poised to Benefit

Such stupendous budgetary proposal and growth projections are poised to benefit other prominent missile makers in the nation, such as Boeing BA, Raytheon Technologies RTX and General Dynamics GD.

Boeing’s missile defense capabilities within the Integrated Air & Missile Defense portfolio include Arrow 3 and land-based Intercontinental Ballistic Missiles for the U.S. Air Force.

Raytheon Technologies' missile defense capabilities include Patriot GEM-T missiles; SM-6 missile destroys cruise missiles and ballistic missiles, NASAMS, among others.

General Dynamics’ Ordnance and Tactical Systems are the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.

Price Performance and Zacks Rank

Shares of this Zacks Rank #3 (Hold) company have gained 17.9% in the past twelve months compared with the industry’s decline of 13.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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