Leidos LDOS recently announced that it has signed a $2.7 billion contract with the U.S. Army to accelerate hypersonic weapons full-scale production. The contract combines the Thermal Protection Shield (“TPS”) and Common Hypersonic Glide Body (“CHGB”) programs, simplifying production and speeding deployment of this key capability in line with the Army’s acquisition reform efforts.
The company has been the leading contractor of the TPS program since 2021 and the CHGB program since 2019, and the project is part of the company’s NorthStar 2030 strategy. By leveraging its expertise in guidance systems, sensor technologies and precision munitions integration, the company is well-positioned to efficiently scale up production.
LDOS is committed to assisting the Army and Navy in delivering this vital operational capability. This large, long-term defense contract is expected to support the company’s future revenue growth.
Even though the company received a sizeable contract from the U.S. Army, the market reaction was docile and LDOS shares have lost nearly 2.8% since the date of announcement of the deal, closing at $124.84 per share on May 18, 2026.
Role of Hypersonic Weapons
According to SpaceNews, Hypersonic weapons play an important role in battlefield dominance, and countries like China, Russia, North Korea and Iran are also developing similar technology. Hypersonic weapons are strategically important for the U.S. military as they are difficult to detect and intercept. Escalating geopolitical tensions across the globe are prompting U.S. defense authorities to strengthen their defense capabilities through increased investments in advanced military systems like hypersonic weapons.
Other Defense Operators Having Hypersonic Programs
Apart from Leidos, some other defense contractors are well-positioned to capitalize on growth opportunities in the defense systems market.
Lockheed Martin Corporation LMT is one of the world’s largest aerospace and defense contractors, operating through four major segments. The company is engaged in developing highly advanced hypersonic technology and sustaining advanced missile and rocket systems.
LMT has a long-term (three to five years) earnings growth rate of 18.48%. The Zacks Consensus Estimate for 2026 earnings is pinned at $29.88 per share, which implies a year-over-year increase of 29.24%
RTX Corporation RTX, operating through three segments, provides systems and services to commercial, military and government customers across the world. It’s a prominent player in the aerospace and defense industry, leveraging its weapons expertise to develop air-breathing hypersonic scramjet systems that utilize high-speed airflow for propulsion and operate with a single solid rocket booster without moving parts.
RTX has a long-term earnings growth rate of 10.21%. The Zacks Consensus Estimate for 2026 earnings is pinned at $6.91 per share, which implies a year-over-year increase of 9.86%
Northrop Grumman Corporation NOC operates through four segments and is engaged in developing advanced hypersonic engines and propulsion technologies, including scramjet systems. The company also develops and produces essential missile components like warheads and fuses.
NOC has a long-term earnings growth rate of 5.25%. The Zacks Consensus Estimate for 2026 earnings is pinned at $28.01 per share, which implies a year-over-year increase of 6.34%.
Price Movement of LDOS
Over the past three months, shares of the company have plunged 27.8% compared with the industry’s 3% decline.
Image Source: Zacks Investment Research
Leidos’s Zacks Rank
LDOS currently carries a Zacks Rank #3(Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).