Lockheed Has a Message for Investors: Don’t Count Us Out in the Drone Wars

Artist rendering of Lockheed Martin Skunk Works Vectis, a Group 5 survivable and lethal collaborative combat aircraft. (Lockheed Martin Aeronautics)

Key Points

About This Summary

• Lockheed Martin unveiled Vectis, a new drone designed for air-to-air, air-to-surface, and surveillance missions, developed by its Skunk Works division.
• Lockheed Martin’s stock was down 1% this year and 17% over the past 12 months, underperforming other major US defense contractors.
• The company is addressing investor concerns about expensive manned fighter jets by developing drones that can complement or potentially replace them.

Lockheed Martin recently sent investors an important reminder: It makes incredible drones, too.

Sunday, the defense contractor unveiled its Vectis, a “lethal collaborative combat aircraft to advance unparalleled air dominance for American and allied militaries.”

It’s a drone. One designed to work with fighter jets. It’s intended to be a fast-developed, stealthy, and affordable jet, capable of air-to-air, air-to-surface, and surveillance missions.

“Vectis is the culmination of our expertise in complex systems integration, advanced fighter development, and autonomy,” said OJ Sanchez, vice president and general manager, Lockheed Martin Skunk Works, in a news release. “We’re not simply building a new platform—we’re creating a new paradigm for air power based on a highly capable, customizable, and affordable agile drone framework.”

This isn’t a Pentagon-funded product. Lockheed might be thinking it can be paired with its dominant F-35 jet. More than 1,200 F-35’s have been delivered to militaries around the globe.

It was developed at Lockheed’s famous “Skunk Works,” a top-secret design center that worked on aircraft, including the SR-71 Blackbird reconnaissance jet capable of flying faster than 2,000 miles per hour and the F-117 Nighthawk stealth attack jet.

Lockheed stock was up 0.4% in midday trading on Tuesday, while the S&P 500 was down 0.1% and the Dow Jones Industrial Average was up 0.3%

Coming into Tuesday trading, shares were down 1% this year and 17% over the past 12 months. It’s been the weakest of the large U.S. defense contractors by far. Shares of RTX, General Dynamics , Northrop Grumman, Huntington Ingalls Industries, and L3Harris Technologies were up about 30% this year, on average.

The differential performance left Lockheed trading for about 16 times estimated 2026 earnings, with the other five trading for closer to 20 times.

Investors have been worried about the future of expensive manned fighter jets, and Lockheed makes the premier jet: The F-35 Joint Strike Fighter.

It’s a $100 million piece of incredible aerospace engineering, but upstarts such as privately held Andruil want to make cheaper, capable, unmanned systems that reduce dependence on manned fighter jets. Andruil is developing a collaborative combat aircraft dubbed Fury.

“We don’t expect drones to fully replace manned platforms in five to 10 years, but they will siphon off funding from manned platforms and will complement them,” wrote Capital Alpha Partners analyst Byron Callan in a recent report.

The threat is real, but Lockheed has time. Now its challenge is to deliver smart drones and manned fighters.

It will be a dogfight for the company, and one that the company is preparing for.

Write to Al Root at allen.root@dowjones.com