Lockheed Martin Corp’s. LMT business unit, Aeronautics, recently secured a modification contract for supporting integration of Foreign Military Sales (FMS) customers into the F-35 Lightning II Joint Strike Fighter program. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Valued at $23 million, the contract is expected to be completed in March 2025. The services to be provided by the Aeronautics unit will include country-specific production support, modifications, logistics and sustainment services involving F-35 jets. Majority of the work related to the deal will be carried out in Fort Worth, TX, and Nagoya, Japan.
Rise in Demand Aids F-35 Program
The rise in global terrorism and adverse geopolitical situations have increased the need for enhancing the nation's defense budget, a major portion of which is allocated to combat aircraft. To this end, it is imperative to mention that the F-35 program is supported by an international team of leading aerospace majors, including Northrop Grumman NOC, BAE Systems (OTC:BAESF) BAESY and Pratt & Whitney, a unit of Raytheon Technologies (NYSE:RTX) RTX. Northrop Grumman renders its expertise in carrier aircraft and low-observable stealth technology to this program. BAE Systems’ short takeoff and vertical landing experience, and air systems sustainment support the jet’s combat capabilities, whereas Pratt & Whitney offers its combat-proven engine to this jet.
Such features have enabled the F-35 jet to dominate the combat aircraft market, buoyed by solid demand, as is evident from the frequent contract wins involving the F-35 program and its associated upgrades, both from Pentagon and other U.S. allies. The latest contract win is a bright example of that.
Growth Prospects of F-35 Program
The F-35 program’s importance across the globe is widespread, with the program having eight international program partners, namely the United States, the United Kingdom, Italy, the Netherlands, Australia, Norway, Denmark and Canada. Additionally, it has six Foreign Military Sales customers that are procuring and operating the F-35 — Israel, Japan, South Korea, Poland, Belgium and Singapore. This demonstrates the huge demand this jet program enjoys worldwide.
As of Mar 28, 2021, Lockheed Martin delivered 628 F-35 airplanes since the program's inception with 339 jets still in the backlog. This surely boosts sales expectations for the Aeronautics business segment in the coming days.
Interestingly, the production of F-35 jets is expected to continue for many years, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps and Navy. Consequently, we expect Lockheed Martin to witness more order inflows for F-35 and its associated upgrades, like the latest one, which in turn should bolster this defense contractor’s top line.
Price Movement and Zacks Rank
Shares of Lockheed Martin, a Zacks Rank #3 (Hold) company, have gained 6.8% in the year to date period compared with the industry’s growth of 8.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lockheed Martin Corporation (NYSE:LMT): Free Stock Analysis Report
Northrop Grumman Corporation (NYSE:NOC): Free Stock Analysis Report
Bae Systems PLC (BAESY): Free Stock Analysis Report
Raytheon (NYSE:RTN) Technologies Corporation (RTX): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research