Yahoo Finance Raytheon (RTX) to Supply Missile Spare Parts to Germany
Raytheon Technologies Corp.’s RTX business unit, Missiles and Defense, recently clinched a modification contract for providing spare parts for the Rolling Airframe Missile (“RAM”) Mod 5 Guided Missile Launching System (“GMLS”). The award has been offered by the Naval Sea Systems Command, Washington, D.C.
Details of the Deal
Valued at $57.3 million, the contract is projected to get completed by July 2026. Per the terms of the deal, Raytheon will deliver material and fabricate parts for RAM MK 49 Mod 5 GMLS as well as GMLS Ordnance Alteration Kits.
The contract will serve the German Navy. A major portion of the work related to this deal will be carried out in Ottobrunn, Germany.
How Will the Deal Favor Raytheon?
Increasing geopolitical tensions worldwide have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. With the United States being the world’s largest weapon supplier and Raytheon being a prominent U.S. missile maker, the increased missile defense adoption by nations offers the company solid growth opportunities.
Raytheon’s RAM guided missile weapon system is the world's most modern ship self-defense weapon and is designed to provide exceptional protection for ships of all sizes. RAM is currently deployed on more than 165 ships in 11 countries, ranging from 500-ton fast-attack crafts to 95,000-ton aircraft carriers.
Further, RAM’s latest version, the Block 2 variant, has a larger rocket motor, an advanced control section and an enhanced RF receiver capable of detecting the quietest of threat emitters. These improvements have made RAM two and a half times more maneuverable, with one and a half times the effective intercept range.
With this advanced weaponry in its portfolio, Raytheon enjoys solid demand in the defense space. The latest contract is expected to boost the company’s top line in the coming quarters.
Growth Prospects
Per a report by the Research and Markets firm, the global rocket and missile market is projected to witness a CAGR of 4.5% during the 2022-2030 period to reach $84.2 million by 2030. Such massive growth projections indicate solid opportunities for Raytheon Technologies and other major defense primes like Northrop Grumman NOC, Lockheed Martin LMT and Boeing BA, which specialize in developing technologically advanced missiles.
Northrop Grumman’s missile defense program includes AGM-88E advanced anti-radiation guided missiles, the Ground Based Strategic Deterrent weapon system and rocket propulsion systems. In August 2022, the company had been chosen by the U.S. Missile Defense Agency to lead the Homeland Missile Defense Program.
Northrop currently boasts a long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for NOC’s 2023 sales implies an improvement of 4.7% over the 2022 reported figure.
Lockheed Martin’s missile defense program includes the Patriot Advanced Capability-3 (PAC-3) and Terminal High-Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, the Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.
Lockheed boasts a four-quarter average earnings surprise of 7.46%. The stock has a long-term earnings growth rate of 6.2%.
Likewise, Boeing-built and supported air and missile defense systems have protected the nation, warfighters, allies and international partners against threats ranging from intercontinental ballistic missiles to hostile aircraft for almost 25 years. Its missile and missile portfolio includes Aegis Ballistic Missile Defense, Avenger, Ground-Based Midcourse Defense and PAC-3 Missile Seeker.
The Zacks Consensus Estimate for Boeing’s 2023 sales suggests an improvement of 17.9% over 2022’s reported figure. The stock has a long-term earnings growth rate of 4%.
Price Performance
In the past year, Raytheon Technologies shares have rallied 4.6% compared with the industry’s 10.5% growth.
Image Source: Zacks Investment Research
Zacks Rank
Raytheon Technologies carries a Zacks Rank #4 (Sell) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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