Investing.com -- Defense contractors are positioning themselves to capture significant opportunities from the Trump administration’s ambitious $175 billion Golden Dome missile defense initiative.
According to Jefferies analysis, the multi-layered defense system will include space-based sensing, land-based interceptors, radar arrays, and potentially directed energy systems.
With $25 billion already appropriated and another $45.3 billion requested in the FY26 budget, several defense contractors stand to benefit substantially from this massive undertaking.
1.L3Harris Technologies (LHX) emerges as one of the top beneficiary according to Jefferies. The company is well-positioned as both a propulsion provider for THAAD, Standard Missile, and NGI systems, and as a potential integrator of AI/ML technologies through partnerships with Palantir and Shield AI.
L3Harris’s Hypersonic and Ballistic Tracking Space Sensor (HBTSS) system was specifically mentioned in the Golden Dome Executive Order. Management anticipates a constellation of 40-45 HBTSS satellites, which could add approximately $250 million in annual revenues, contributing about 1 percentage point to total company growth.
Additionally, L3Harris’s Aerojet Rocketdyne division can provide rocket motors at scale for various missiles and interceptors, with management projecting $4 billion in revenues by 2030.
L3Harris Technologies reported second-quarter revenue of $5.43 billion and adjusted earnings of $2.78 per share, prompting price target increases from both Bernstein and RBC Capital. The company also announced the successful launch of its experimental NTS-3 navigation satellite.
2. Lockheed Martin (LMT) has been proactive in highlighting its numerous applicable systems for Golden Dome. Key programs include the Next Generation Interceptor (NGI), PAC-3 interceptors, SBIRS early missile detection, Long Range Discrimination Radar (LRDR), Sentinel A4 surveillance radar, Aegis combat system, and THAAD missile defense.
The $17 billion NGI program alone is adding approximately $500 million in incremental revenues in each of 2023 and 2024. Any expansion of the interceptor footprint could add $250+ million per year. Additionally, PAC-3 missiles used by Patriot systems could generate $7.6 billion for 11 batteries over ten years, or $760 million annually.
In recent news, Lockheed Martin was awarded multiple contracts, including a $110.9 million modification for Trident missile support and a $56.4 million contract for B-2 countermeasure receivers. BofA Securities lowered its price target on the company following the report of $1.8 billion in charges during the second quarter.
3. Northrop Grumman (NOC) offers similar capabilities with programs such as Glide Phase Interceptor for hypersonic threats, propulsion systems, satellite infrastructure, and the Integrated Air and Missile Defense Battle Command System (IBCS).
IBCS appears most likely to benefit, with sales projected to grow from $700 million to $1.2 billion between 2024 and 2027. With expanded scope, this could add an incremental $150 million per year, contributing 0.4 percentage points to total company growth.
Following a strong second-quarter earnings report, Northrop Grumman received price target increases from both RBC Capital and Bernstein. The company was also awarded a $99 million contract to support the Department of Defense’s command and control vision and completed delivery of its Integrated Battle Command System to the U.S. Army.
4. RTX/Raytheon brings exposure to both interceptors (Standard Missile/Patriot) and radars, including the Army’s next-generation LTAMDS. The Patriot system appears to be an immediate beneficiary, with 11 domestic batteries planned for the land-based layers.
With each battery costing approximately $400 million, this represents a potential $4.4 billion opportunity, or $440 million annually over ten years, adding 2 percentage points to Raytheon’s growth.
Raytheon was awarded a $380 million contract modification for its Medium Range Intercept Capability (MRIC) production and an additional $71 million in contracts for missile system work. The company also successfully completed a 360-degree flight test for its Lower Tier Air and Missile Defense Sensor.
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