Why Is the U.S. Air Force Buying $1.9 Billion in New Missiles From Lockheed Martin?
It takes a lot of profit to change the value of a defense stock as big as Lockheed Martin.
Big contract announcements at the U.S. Pentagon can clue investors in to the potential for lucrative stock wins from the companies that win those contracts. It doesn't always work this way, but it does sometimes. That's why I'm paying attention now to one of the biggest weapons contracts announced by the Department of Defense in recent weeks: A March 13 order from the Air Force instructing Lockheed Martin (NYSE: LMT) to proceed with production of order "Lot 23" of the Joint Air to Surface Standoff Missile (JASSM) and also order "Lot 9" of the Long-Range Anti-Ship Missile (LRASM), and to prepare for subsequent lots as well.
Both these missile types have been requested by Ukraine for use in its defensive war against Russia. Additionally, both weapons systems fit within the Pentagon's plans to improve the United States' long-range strike capabilities in the Pacific theater.
The Pentagon did not specify precisely how many missiles Lockheed will be building, and amounts appear to vary from lot to lot. However, a 2023 Defense Department document described the sizes of production lots as ranging from 550 to 810 missiles per JASSM lot, and from 120 to 240 missiles per LRASM lot. We also know much more precisely what the Pentagon plans to pay for these missiles: $1.9 billion.
