Raytheon (RTX) Wins $320.3M Deal for StormBreaker Production

·3 min read

Raytheon Technologies Corp.’s RTX business unit, Missiles and Defense, recently clinched a contract for the production of the ninth lot of the StormBreaker Bomb. The Air Force Life Cycle Management Center, Eglin Air Force Base, FL, has awarded the deal.

Valued at $320.3 million, this contract entails the supply of StormBreaker’s assembled weapons and containers. The work related to this deal will be carried out in Tucson, AZ, and is scheduled to be completed by Jun 30, 2027.

What's Favoring Raytheon Technologies?

The increasing geo-political tension has alarmed nations to upgrade and modernize their defense landscape to meet the evolving requirements of military missions. In this context, arms and ammunition, including military bombs that play a pivotal role in military missions, have witnessed a significant rise in demand.

The U.S. fiscal 2024 defense budget proposal highlights $20.4 billion for investments in missile defeat and defense and $11 billion for a mix of highly-lethal precision weapons. This opportunistic defense spending entails probable orders for companies manufacturing military missiles and related weapons.

In light of the aforementioned factors, one may say that Raytheon Technologies, which enjoys an established position in the missile defense system, may continue to capitalize on the growing demand and witness a strong inflow of orders, like the latest one. This shall boost RTX’s revenues from the Missiles and Defense business unit.

Growth Prospects

Per the reports from Markets and Markets, the global missile defense system market is expected to witness a CAGR of 3.9% from 2021 to 2026. Considering the expanding size of the missile defense market and the fortifying defense spending worldwide, defense companies like Raytheon, which boast a comprehensive portfolio of missile defense products, stand to benefit from the increasing demand.

In this regard, companies other than RTX that may witness the surging demand for missiles portfolio of products are as follows:

Northrop Grumman NOC designs and produces missile products, including advanced high-speed propulsion systems, fuses, warheads, etc.

Northrop Grumman has a long-term earnings growth rate of 3.5%. The Zacks Consensus Estimate for NOC’s 2023 sales suggests a growth rate of 4.6% from the prior-year reported figure.

Lockheed Martin’s LMT Missiles and Fire Control business unit develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers. Some of its product range includes the PAC-3 family of missiles, M270, RRPR, THHAD, etc.

Lockheed Martin’s long-term earnings growth rate is pegged at 6.9%. Shares of LMT have returned 3.2% value to investors in the past year.

General Dynamics’ GD Ordnance and Tactical Systems (“OTS”) designs, develops and produces a comprehensive array of sophisticated weapon systems for ground forces and produces next-generation weapon systems for shipboard and aircraft applications. OTS maintains a leading position in providing missile subsystems in support of U.S. tactical and strategic missiles.

General Dynamics boasts a long-term earnings growth rate of 8.6%. The Zacks Consensus Estimate for GD’s 2023 earnings suggests a growth rate of 5.8% from the prior-year reported figure.

Price Movement

In the past six months, shares of Raytheon Technologies have rallied 18.3% compared with the industry’s growth of 20.6%.

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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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