Yahoo Finance Raytheon (RTX) Wins Deal to Support F-135 Propulsion System
Raytheon Technologies Corp.’s RTX business segment, Pratt & Whitney, recently won a contract involving the F-135 propulsion system. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $69 million, the contract is expected to be completed by December 2025. Per the terms, Raytheon will offer non-recurring engineering for early identification, development, and qualification of corrections to potential and actual F-135 propulsion system operational issues.
Through this order, Raytheon will also provide continued engine maturation; evaluate component life limits based on operational experience; improve operational readiness; as well as reduce engine maintenance and life cycle costs to support the F-35 Lightning II program.
The majority of the work related to this deal will be carried out in East Hartford, CT.
F-35 & Pratt and Whitney
Over the past decade, a rapid rise in global terrorism and adverse geopolitical situations across borders have boosted demand for defense products, with combat aircraft constituting a major portion of that portfolio.
It is imperative to mention that the F-35 jets built by America’s largest defense contractor, Lockheed Martin LMT enjoy a dominant position in the combat jet market. With F-35 being one of the top-notch stealth aircraft, Lockheed enjoys a consistent inflow of contracts for the production, delivery of associated spare parts and other deals concerning the F-35 jet program.
For instance, in May 2022, the company won two significant contracts, worth $632 million and another valued at $398 million to support the F-35 program. Such contract wins by Lockheed also benefit Pratt and Whitney, which supplies the F135 engine that powers all three variants of the F-35 fighter jets.
Therefore, as the F-35 jet continues to dominate the combat aircraft market, Pratt & Whitney stands to benefit from order flow. The latest contract win is an example of that.
Growth Prospects
The production of F-35 jets is expected to continue for many years, given the U.S. government's current inventory target of 2,456 aircraft for the Air Force, Marine Corps. and Navy. Consequently, Pratt and Whitney is expected to witness more order inflows involving the F-35 program, like the latest one, which should bolster Raytheon Technologies’ top line.
Besides Lockheed and Raytheon, which benefit from the solid production target for F-35, Northrop Grumman NOC and BAE Systems Plc BAESY are also poised to gain as both of them are key partners in the F-35 program.
Northrop renders its expertise in carrier aircraft and low-observable stealth technology for the F-35 program. Being a pioneer in the development of manned combat aircraft, Northrop has a tradition of providing technological leadership in all aspects of military aviation and aircraft.
Currently Northrop boasts a long-term earnings growth rate of 6.1%. The Zacks Consensus Estimate for NOC’s 2022 sales indicates growth of 2.6% from the 2021 reported figure.
BAE Systems’ short takeoff and vertical landing experience and air systems sustainment support F-35’s combat capabilities. The company provides an electronic warfare suite for F-35, including a fully integrated radar warning, targeting support and self-protection to detect and defeat surface and airborne threats.
BAE Systems has a solid long-term earnings growth rate of 8.9%. The Zacks Consensus Estimate for BAESY’s 2022 sales indicates growth of 20.4% from the 2021 reported figure.
Price Movement and Zacks Rank
Raytheon’s shares have gained 11.9% in the past year against the industry’s decline of 2.3%.
Image Source: Zacks Investment Research
The company 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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