News

Lockheed Martin Corp.’s LMT business unit, Sikorsky, recently clinched a contract for UH-60M helicopter. The award has been provided by the Army Contracting Command, Redstone Arsenal, AL.

Valued at $251.5 million, the project is expected to be completed by Jun 30, 2027. Work related to this deal will be executed in Stratford, CT.

What’s Favoring Lockheed?

Rising geopolitical conflicts across the globe have prompted nations to significantly enhance investments in strengthening their defense capabilities. Aerial security is one of the pillars of a country’s defense structure, and combat helicopters play a critical role in bolstering airborne safety.

Therefore, with nations boosting their defensive abilities, demand for technologically advanced combat helicopters is rising. This trend has been benefiting prominent defense contractors like Lockheed Martin, a well-known name in military helicopter manufacturing.

Notably, LMT’s UH-60M Black Hawk helicopters are used for multiple purposes ranging from delivering and extracting troops, saving lives as a MEDEVAC or casualty evacuation platform, providing critical supplies to troops, delivering emergency supplies during natural disasters, to performing as an aerial firefighter and border patroller.

Consequently, this multirole helicopter serves the U.S. military and the armed forces of 34 other countries worldwide. Its solid demand can be further gauged from the fact that over 4,000 Black Hawk helicopters of all types are in service worldwide today.

What Lies Ahead for LMT?

Ongoing military modernization initiatives undertaken by varied nations to procure more advanced helicopters to protect their borders from rising cross-border disputes and territorial invasions, along with the evolving nature of modern warfare bolstering the need for more technologically advanced rotorcraft, have been boosting the growth prospects of combat helicopter market.

This must have led Morder Intelligence to project that the global military helicopter market will witness a CAGR of 2.9% during the 2024-2029 time period.

Such projections further indicate immense growth opportunities for Lockheed Martin. Apart from UH-60M, Lockheed’s Sikorsky unit manufactures CH-148 Cyclone, CH-53K, RAIDER X, HH-60W, MH-60R Seahawk and a few more combat rotorcraft, which enjoy consistent demand in the military helicopter market.

Opportunities for Peers

Other notable defense contractors that have a significant presence in the global military helicopter market and are expected to gain from this market’s growth are mentioned below:

Textron TXT: Its Bell segment supplies advanced military helicopters as well as parts and support services to the U.S. Government and other U.S. allies. Bell’s primary military helicopter programs include V-22 tiltrotor aircraft, primarily for the U.S. Department of Defense, and H-1 helicopters for the U.S. Marine Corps. It also manufactures 407 light attack helicopters and 429M multi-mission helicopters.

Textron has a long-term earnings growth rate of 10.1%. The Zacks Consensus Estimate for TXT’s 2024 sales indicates an improvement of 5.7% from the 2023 reported figure.

Boeing BA: It supports the vital missions of defense forces worldwide with combat-proven helicopters. Its H-47 Chinook, AH-64 Apache, AH-6 Little Bird and V-22 Osprey helicopters have redefined the limits of technology, capability and sustainability to ensure the production and delivery of reliable, maintainable and mission-ready aircraft.

Boeing’s long-term earnings growth rate is pegged at 25.5%. The stock holds an average four-quarter earnings surprise of 17.83%.

Airbus Group EADSY: It is one of the world's largest suppliers of advanced military helicopters. Its military helicopter portfolio comprises the H125M, Military Training H135, H145M, AS565 MBe, H160M, H215M, H225M, Tiger and NH90 (TTH and NFH).

Airbus boasts a long-term earnings growth rate of 14%. The Zacks Consensus Estimate for EADSY’s 2024 sales indicates an improvement of 6.2% from the 2023 reported figure.

Price Movement

In the past three months, shares of Lockheed Martin have risen 1.6% against the industry’s fall of 0.2%.

Image Source: Zacks Investment Research

Zacks Rank

Lockheed Martin 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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