The United States government and Lockheed Martin announced a new joint contract for the production of precision missiles.
like the biggest aerospace and defense company in the world, Lockheed Martin, headquartered in Bethesda (LMT) – Get a free reportis also from the US government. larger contractor.
In 2022, he delivered to the company received $47.2 billion o $6.81% of the $693.2 billion the government spent on all contracts in 2022. These include everything from $1.05 billion to producer118 Lot 18 F-35 aircraft for the Air Force and Marine Corps for$431 millionfor new High Mobility Artillery Rocket Systems (HIMARS) for both the US and foreign allies.
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In February 2023, the US government removed another $1.1 billion to build hypersonic attack capability on existing navy ships.
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The US government wants long-term production of these missiles
This week, the US government and Lockheed Martin announced a new joint contract for the production of precision missiles for both the US and its allies.
Intended for continued production over several years, the contract consolidates another $439 million in Joint-Air-to-Ground Missiles (JAGM) and HELLFIRE missiles and leaves the potential for up to $4.35 billion to be spent by 2027.
“This contract award, coupled with last year’s JAGM full-rate production decision, shows the Army’s confidence in the combat effectiveness and defensive capabilities of our product, including its longevity potential due to support for further production,” Joey Drake, who heads up the show’s management. at Lockheed Martin Missiles and Fire Control, he said in a statement.
The contract is intended to ensure steady and continuous production of these high-precision missiles amid a “significant increase in international demand”: after Russia’s February 2022 invasion of Ukraine, various international partners have supplied to the latter HIMARS missiles.
On April 4, the Biden Administration committed to a new security package that includes ammunition for the 20 Lockheed Martin HIMARS systems it has supplied to Ukraine since the start of the war.
Countries like Estonia and Poland, which border mainland Russia or the Russian exclave of Kaliningrad, have also been buying preventivelyHIMARS systems.
“Both JAGM and HELLFIRE’s advanced defensive capabilities provide users with a critical solution that allows them to stay ahead with a competitive advantage against potential adversaries,” said Drake. “This contract allows us to continue to provide those solutions to our customers for years to come.”
Here’s why some analysts are hesitant to invest too much in defense stocks
Despite strong demand for the many high-precision weapons that only Lockheed Martin can produce, some analysts have advised against placing too much faith in the sustained success of its actions.
Last December, the company posted earnings that beat expectations with $18.99 billion in the fourth quarter and $66 billion in annual revenue. While arms demand is only expected to rise amid multiple brewing global conflicts and Lockheed delivers consistent results, the entire defense industry can be volatile due to its reliance on political actions.
“Just because it prioritizes national defense doesn’t mean Congress will do it until it has to,” Stephen Guilfoyle wrote for TheStreet’s RealMoney in January 2023. “Your average politician probably doesn’t understand the need to take the lead in hypersonic defense that they would if something terrible happened.”
Guilfoyle added that he would not abandon “advocacy actions as a group” but would “adjust the exposure.”
