Lockheed Martin Wins Contract to Aid CH-53K Helicopter Program Lockheed Wins Contract to Bolster CH-53K Helicopter Program

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Lockheed Martin Corp.’s LMT subsidiary, Sikorsky, has recently clinched a contract from the Naval Air Systems Command, Patuxent River, MD, involving the CH-53K helicopter.

Details of the Deal

Valued at $79.7 million, the contract is anticipated to be completed by December 2028. Under the agreement, Lockheed will provide updated logistics analysis and products to support configuration changes on the CH-53K helicopter.

The contract also includes the development and delivery of new intermediate and depot component repair capability, along with all analysis, products, and services related to gearboxes, the Air Data Computer, and aircraft hoses and tubes. The majority of the work associated with this contract will be carried out in Stratford, CT.

What’s in Favor of Lockheed?

Notably, the CH-53K King Stallion builds on Sikorsky’s previous manufacturing and operational triumphs with its CH-53A, CH-53D/G, and CH-53E predecessors. Tailored to excel in the modern battlefield, including shipboard operations, the CH-53K aircraft is engineered to be intelligent, reliable, low maintenance, and survivable in harsh and distant forward operating bases. With over 1,200 test flight hours already flown for this helicopter and several milestones achieved in 2018, including high altitude, hot temperature, and degraded visual environment flights, the demand for CH-53K seems robust, thus driving contract flows for LMT, like the recent one. These contract flows are anticipated to bolster LMT’s revenues in the upcoming quarters.

Promising Growth Opportunities

In recent years, U.S. military helicopters have garnered attention and significant traction due to advancements and integration of new tactical, logistical, and other crucial features. Some of these strides can be credited to Lockheed for successfully securing valuable helicopter-related contracts as of late. The recent contract win is a shining example of this.

Looking forward, the escalating geopolitical and cross-border conflicts across the globe have compelled nations to ramp up their defense spending for acquiring new aircraft and helicopters to augment their aerial capabilities. As per a report from Mordor Intelligence, the military rotorcraft market is expected to witness a CAGR of more than 4% during the 2023-2028 period. This is likely to significantly benefit Lockheed, given the company’s dominant position in the military helicopter market with its portfolio containing programs such as the Black Hawk, Seahawk, and CH-53K King Stallion heavy-lift helicopters.

Peer Prospects

Other defense companies that may stand to gain from the burgeoning military helicopter market have been discussed below.

The Boeing Company BA: Its Defense, Space & Security segment’s primary products include fixed-wing military aircraft, rotorcraft, and rotary-wing programs, such as CH-47 Chinook, AH-64 Apache, and V-22 Osprey. Boeing has a long-term earnings growth rate of 4%.

Airbus Group EADSY: One of the world’s largest suppliers of advanced military helicopters, Airbus Group boasts a product portfolio including a wide range of combat helicopters. The company’s long-term earnings growth rate is 12.4%.

Textron TXT: Its business unit, Textron Aviation Defense, designs, builds, and supports versatile and globally recognized military helicopters, which are preferred for training and attack missions. TXT has a long-term earnings growth rate of 11.7%.

Price Movement

In the past three months, Lockheed shares have risen 10.1%, compared with the industry’s growth of 12.1%.

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Zacks Rank

Lockheed 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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