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Lockheed (LMT) and Northrop Win $7.6B Missile Contracts
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Per major media sources, Lockheed Martin Corp. (LMT - Free Report) and Northrop Grumman Corp. (NOC - Free Report) have recently acquired two separate contracts for designing the next-generation interceptor for the U.S. missile defense network. The Missile Defense Agency also made an announcement of spending a combined $1.6 billion, at most, on both contractors through fiscal-year 2022.
A Brief on the Mega Deal
The next-generation interceptor warheads would be part of the Ground-based Midcourse Defence (GMD) system and will be pivotal in crashing into and destroying incoming missiles from an adversary, such as North Korea or Iran. Evidently, both contractors will eye on making the technology capable of defeating current ballistic missile threats and future technological advances. The Lockheed Martin deal from the Pentagon could be valued at as much as $3.7 billion, while the Northrop Grumman contract could be valued at up to $3.9 billion.
How Will the Deal Benefit Defense Contractors?
Increasing geopolitical tensions across the globe have prompted nations to strengthen their defense systems manifold, especially missile defense systems. With growing security threats across the globe, emerging economies like the Asia Pacific and the Middle East are spending a great deal on enhancing missile defense networks.
Recently, North Korea launched two ballistic missiles into the Sea of Japan, which, on a global scale, is a threat as it’s a clear violation of UN resolutions. Iran also possesses the most diverse ballistic missile arsenal in the Middle East and its ever-growing arsenal is projected to be a huge threat looming over the Middle East region.
This has set the stage for defense contractors like Northrop and Lockheed to win contracts like the latest one.
Furthermore, as far as the prospects of these stocks are concerned, it is imperative to mention that the U.S. government’s fiscal 2021 defense budget includes a significant spending plan of $20.3 billion on missile defense. Such an increased spending provision should usher in more contracts for Lockheed Martin and Northrop Grumman’s varied range of missile programs, like the latest one.
In line with the aforementioned budgetary amendments, major defense players, especially those which manufacture missiles, like Raytheon Technologies (RTX - Free Report) and Boeing (BA - Free Report) , should also benefit, going ahead.
In the past year, Lockheed Martin’s shares have gained 1.7% compared with the industry’s 13.7% growth, whereas Northrop Grumman’s shares have declined 1.6%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Lockheed (LMT) and Northrop Win $7.6B Missile Contracts
Per major media sources, Lockheed Martin Corp. (LMT - Free Report) and Northrop Grumman Corp. (NOC - Free Report) have recently acquired two separate contracts for designing the next-generation interceptor for the U.S. missile defense network. The Missile Defense Agency also made an announcement of spending a combined $1.6 billion, at most, on both contractors through fiscal-year 2022.
A Brief on the Mega Deal
The next-generation interceptor warheads would be part of the Ground-based Midcourse Defence (GMD) system and will be pivotal in crashing into and destroying incoming missiles from an adversary, such as North Korea or Iran. Evidently, both contractors will eye on making the technology capable of defeating current ballistic missile threats and future technological advances. The Lockheed Martin deal from the Pentagon could be valued at as much as $3.7 billion, while the Northrop Grumman contract could be valued at up to $3.9 billion.
How Will the Deal Benefit Defense Contractors?
Increasing geopolitical tensions across the globe have prompted nations to strengthen their defense systems manifold, especially missile defense systems. With growing security threats across the globe, emerging economies like the Asia Pacific and the Middle East are spending a great deal on enhancing missile defense networks.
Recently, North Korea launched two ballistic missiles into the Sea of Japan, which, on a global scale, is a threat as it’s a clear violation of UN resolutions. Iran also possesses the most diverse ballistic missile arsenal in the Middle East and its ever-growing arsenal is projected to be a huge threat looming over the Middle East region.
This has set the stage for defense contractors like Northrop and Lockheed to win contracts like the latest one.
Furthermore, as far as the prospects of these stocks are concerned, it is imperative to mention that the U.S. government’s fiscal 2021 defense budget includes a significant spending plan of $20.3 billion on missile defense. Such an increased spending provision should usher in more contracts for Lockheed Martin and Northrop Grumman’s varied range of missile programs, like the latest one.
In line with the aforementioned budgetary amendments, major defense players, especially those which manufacture missiles, like Raytheon Technologies (RTX - Free Report) and Boeing (BA - Free Report) , should also benefit, going ahead.
Zacks Rank & Price Performance
Both Lockheed Martin and Northrop Grumman currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past year, Lockheed Martin’s shares have gained 1.7% compared with the industry’s 13.7% growth, whereas Northrop Grumman’s shares have declined 1.6%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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