Defense giants Lockheed Martin (LMT) and General Dynamics (GD) are joining forces to enhance domestic production of solid rocket motors, a critical component for missile propulsion. Under the agreement, GD will commence production of these motors at its Arkansas facility in 2025, exclusively for LMT.
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The companies plan to start by manufacturing motors for the Guided Multiple Launch Rocket System (GMLRS) and later expand to other missile systems. GMLRS is a GPS-guided artillery rocket system that provides long-range fire support.
It is worth highlighting that the recent low supply of rocket and missile motors has become a major bottleneck in the defense supply chain, alongside chip shortages and metal supply constraints. This has limited the industry’s ability to meet the surging demand for weapons systems in Europe, the Middle East, and Asia.
Deal Benefits
The partnership marks GD’s entry into the solid rocket motor market, expanding its role in the defense supply chain beyond missile bodies and warheads.
Further, Lockheed Martin’s top missile executive, Tim Cahill, highlighted the need to secure another major supplier following the company’s unsuccessful attempt to acquire Aerojet, an American rocket and missile propulsion maker, in 2022.
This collaboration is expected to enhance the production capabilities of both companies and contribute to a stronger defense supply chain.
With this backdrop, let’s see what Wall Street thinks about these stocks.
Is LMT Stock a Good Buy?
On TipRanks, LMT has a Moderate Buy consensus rating based on seven Buys, seven Holds, and one Sell rating assigned by analysts in the past three months. After a 35% gain in share price in the past six months, the analysts’ average price target on Lockheed Martin stock of $557.64 implies 0.32% downside potential.
Is GD Stock a Good Investment?
Overall, GD has a Strong Buy consensus rating on TipRanks. This is based on 13 Buy and four Hold recommendations. Analysts’ average price target on General Dynamics stock is $327.44, implying a 12.1% upside potential from current levels.
