Lockheed Martin stock has come under pressure and is underperforming the broader market this year. It was trading at $509 on Friday, down by 26% from its highest point this year, and this sell-off may continue as Anduril launches a new interceptor missile known as Steelfin.
Anduril is working on Steelfin, challenging Lockheed Martin
For many years, the Military Industrial Complex was made up of a handful of companies that dominated the sector. This included top companies like Lockheed Martin, RTX, General Dynamics, Boeing, and Northrop Grumman. These firms had pricing power, allowing them to overcharge the US government and other countries.
Now, the industry is being disrupted by upstarts like Anduril, which is now valued at over $61 billion. Anduril is working on Steelfin, a new line of missile interceptors that will help to counter threats ranging from drones, cruise missiles, ballistic, and hypersonic weapons.
The company notes that the new line will be much cheaper than those offered by Lockheed Martin. It will cost about a third of the Patriot Advanced Capability-3 Missile Segment Enhancement interceptor that costs about $4 million each.
Most notably, the company says that the interceptor will have advanced configurations that will see it conduct missions similar to those made by the Terminal High Altitude Area Defense (THAAD).
Anduril plans to manufacture these missiles in its Arsenal-1 plant in Ohio. It plans to launch them in late 2028 or early 2029. Most notably, unlike the current missile interceptors, Anduril will be able to manufacture thousands of these missiles a year.
Lockheed Martin makes billions making interceptors
This is a big threat to Lockheed Martin, which makes billions of dollars making advanced missile interceptors. While its products work well, analysts caution that they are not sustainable in an era when drones and low-cost missiles are being widely used in wars. For example, these missiles are being used to intercept Iranian drones and missiles that cost much less.
This development means that Anduril, which is a well-connected company, will start gaining market share in the interceptor industry. At the same time, it means that Lockheed Martin will need to develop a competing and low-cost product, which may affect its market. Just last week, the company said that it had been selected by the Army to make the next-generation interceptor to replace Patriot.
The most recent results showed that Lockheed Martin made over $18 billion in the second quarter, up modestly from the $17.9 billion it made in the same period last year. Its net earnings, however, dropped to $1.48 billion from the previous $1.7 billion.
LMT stock price technical analysis
The daily chart shows that the LMT stock has slumped in the past few months, moving from the August high of $607 to the current $509. The current price coincides with the lowest level in April, June, and July.
At the same time, the stock has slumped below the 50-day Exponential Moving Average (EMA) and the Supertrend indicator. The Relative Strength Index (RSI) has dropped from the overbought level of 70 to the current 40.
Therefore, the path of the least resistance is downwards. A move below the support level of $494 will point to more downside, potentially to $450.