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Raytheon (RTX) Wins a $218M Deal to Supply AIM-9X Missiles

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Raytheon Technologies Corp.’s (RTX - Free Report) business unit, Missile and Defense, recently secured a modification contract for the production and delivery of AIM-9X missiles. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $218.4 million, the contract is projected to be over by March 2025. Per the terms, apart from delivering the tactical missiles, Raytheon will provide the associated spare parts like advanced optical target detectors, advanced optical target detectors containers, propulsion steering sections, tail caps, tail cap containers, sectionalization kits and a few more.

A major portion of the work related to this agreement will be executed in Tucson, AZ. 

Growing Missile Demand & AIM-9X

Over the past decade, rapidly growing inter-country as well as intra-country conflicts have prompted nations to bulk up their arsenal, in which missiles play a vital role. Consequently, developed nations like the United States and Europe along with emerging nations like India, Japan, South Korea and a few more have been ramping up their defense capabilities.

Raytheon’s AIM-9X Sidewinder missile is the most advanced infrared-tracking, short-range, air-to-air and surface-to-air missile in the world. It is configured for easy installation in a wide range of modern aircraft, including Boeing’s F-15, F/A-18, E/A-18G and Lockheed’s F-22 and F-35 fighters. Its latest variant, the AIM-9X Block II missile, adds a redesigned fuse and a digital ignition safety device that enhances ground handling and in-flight safety. These features have been boosting the demand for AIM-9X, as is evident from the latest deal win.

Growth Prospects

Per Mordor Intelligence, the missiles and missile defense systems market is estimated to register a CAGR of more than 10% between 2020 and 2025. The growing conflicts and the increasing number of investments in missile defense systems are expected to drive the market, thereby creating solid growth opportunities for Raytheon, a prominent missile maker.

Northrop Grumman (NOC - Free Report) , Lockheed Martin (LMT - Free Report) and General Dynamics (GD - Free Report) are also expected to benefit, considering the growth prospects of the missile and missile defense market.

Northrop is a prominent developer of missile systems, and counter systems, including strategic deterrents, as well as subsystems and components. In fact, to strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air-, sea- and land-based systems.

Northrop boasts a long-term earnings growth rate of 6.2%. The Zacks Consensus Estimate for NOC’s 2022 sales indicates an improvement of 2.6% from the 2021 reported figure.

Lockheed’s Missiles and Fire Control business unit develops, manufactures, and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile as well as the Terminal High Altitude Area Defense missile.

Lockheed boasts a long-term earnings growth rate of 5.7%. The company came up with a four-quarter average earnings surprise of 63.32%.

General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.

General Dynamics boasts a long-term earnings growth rate of 9.6%. The Zacks Consensus Estimate for GD’s 2022 sales indicates an improvement of 2.4% from the 2021 reported figure.

Price Movement

In the past year, Raytheon Technologies’ shares have gained 28.1% compared with the industry’s 16.3% growth.

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Zacks Rank

Raytheon Technologies 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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