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RTX Secures a $287M Contract to Modernize 166 Tomahawk Missiles
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RTX Corp. (RTX - Free Report) recently clinched a modification contract involving its Tomahawk missiles. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $287 million, the contract is expected to be completed by March 2026. The latest modification adds scope for RTX to offer recertification and modernization of 166 Tomahawk Block IV All-Up-Round Missiles. This modification should help enable the missiles to be operational for up to an additional 15 years of service.
This modification also provides for missile obsolescence and health monitoring, software maintenance, depot support and associated hardware procurements. A major portion of the work related to this deal will be executed in Tucson, AZ.
Significance of the Tomahawk Cruise Missile
Raytheon's Tomahawk subsonic cruise missile is used for deep land attack warfare, designed to fly at extremely low altitudes at high subsonic speeds and piloted over an evasive route by several mission-tailored guidance systems. The Naval Strike Missile is a long-range, precision strike weapon that can find and destroy ships at distances of up to 100 nautical miles. A major improvement to Tomahawk is network-centric warfare capabilities, using data from multiple sensors such as aircraft, UAVs, satellites, foot soldiers, tanks and ships to find its target. It will also be able to send data from its sensors to these platforms.
The solid demand that Tomahawk missile enjoys in the missile market can be gauged from the fact that the U.S. and allied militaries have flight-tested the GPS-enabled Tomahawk 550 times and used it in combat more than 2,300 times.
Growth Prospects
Amid the widespread increase in geopolitical tensions worldwide, nations have been strengthening their defense arsenal manifold in recent times. 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 RTX a prominent U.S. missile maker, the increased missile defense adoption by nations provides the company with solid growth opportunities. The latest contract win is a bright example of that.
Hostile activities like the Russian invasion of Ukraine and the ongoing unrest in the Middle East have been bolstering the demand for the missile market even more. The Mordor Intelligence firm predicts the global market for missiles and missile defense systems to witness a CAGR of 4.82% between 2024 and 2029. This should benefit RTX, which has a handful of combat-proven missiles in its product portfolio, like the TOW missile, Guidance Enhanced Missile, the National Advanced Surface-to-Air Missile System, Patriot, Standard Missile 2 and a few more, in addition to the Tomahawk missile.
Opportunities for Peers
As global threats continue to rise, apart from RTX, defense contractors that are likely to benefit from the growth opportunities offered by the missiles and missile defense system market have been discussed below.
Northrop Grumman (NOC - Free Report) : It creates and manufactures warheads, fuses, sophisticated high-speed propulsion systems and other missile components. The company is one of the top suppliers of solid rocket propulsion for air-launched missiles, interceptors, submarine-launched weapons and hypersonic missile systems.
Northrop has a long-term (three to five years) earnings growth rate of 10.1%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates growth of 4.6% from the prior-year reported figure.
Lockheed Martin (LMT - Free Report) : Its Missiles and Fire Control business unit develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers. Some of its products are the PAC-3 family of missiles, M270, RRPR, THHAD and a few more.
Lockheed has a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for LMT’s 2024 sales implies growth of 2.7% from the prior-year reported figure.
General Dynamics (GD - Free Report) : Its Ordnance and Tactical Systems division creates, develops and manufactures an extensive array of highly advanced weapon systems for use by ground troops. It is the sole producer and system integrator of the 2.75-inch (70mm) Hydra-70 family of rockets.
General Dynamics’ long-term earnings growth rate is 10.8%. The Zacks Consensus Estimate for GD’s 2024 sales indicates an improvement of 10.1% from the prior-year reported figure.
Price Movement
In the past six months, shares of RTX have surged 38.5% compared with the industry’s growth of 16.2%.
Image: Bigstock
RTX Secures a $287M Contract to Modernize 166 Tomahawk Missiles
RTX Corp. (RTX - Free Report) recently clinched a modification contract involving its Tomahawk missiles. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal
Valued at $287 million, the contract is expected to be completed by March 2026. The latest modification adds scope for RTX to offer recertification and modernization of 166 Tomahawk Block IV All-Up-Round Missiles. This modification should help enable the missiles to be operational for up to an additional 15 years of service.
This modification also provides for missile obsolescence and health monitoring, software maintenance, depot support and associated hardware procurements. A major portion of the work related to this deal will be executed in Tucson, AZ.
Significance of the Tomahawk Cruise Missile
Raytheon's Tomahawk subsonic cruise missile is used for deep land attack warfare, designed to fly at extremely low altitudes at high subsonic speeds and piloted over an evasive route by several mission-tailored guidance systems. The Naval Strike Missile is a long-range, precision strike weapon that can find and destroy ships at distances of up to 100 nautical miles. A major improvement to Tomahawk is network-centric warfare capabilities, using data from multiple sensors such as aircraft, UAVs, satellites, foot soldiers, tanks and ships to find its target. It will also be able to send data from its sensors to these platforms.
The solid demand that Tomahawk missile enjoys in the missile market can be gauged from the fact that the U.S. and allied militaries have flight-tested the GPS-enabled Tomahawk 550 times and used it in combat more than 2,300 times.
Growth Prospects
Amid the widespread increase in geopolitical tensions worldwide, nations have been strengthening their defense arsenal manifold in recent times. 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 RTX a prominent U.S. missile maker, the increased missile defense adoption by nations provides the company with solid growth opportunities. The latest contract win is a bright example of that.
Hostile activities like the Russian invasion of Ukraine and the ongoing unrest in the Middle East have been bolstering the demand for the missile market even more. The Mordor Intelligence firm predicts the global market for missiles and missile defense systems to witness a CAGR of 4.82% between 2024 and 2029. This should benefit RTX, which has a handful of combat-proven missiles in its product portfolio, like the TOW missile, Guidance Enhanced Missile, the National Advanced Surface-to-Air Missile System, Patriot, Standard Missile 2 and a few more, in addition to the Tomahawk missile.
Opportunities for Peers
As global threats continue to rise, apart from RTX, defense contractors that are likely to benefit from the growth opportunities offered by the missiles and missile defense system market have been discussed below.
Northrop Grumman (NOC - Free Report) : It creates and manufactures warheads, fuses, sophisticated high-speed propulsion systems and other missile components. The company is one of the top suppliers of solid rocket propulsion for air-launched missiles, interceptors, submarine-launched weapons and hypersonic missile systems.
Northrop has a long-term (three to five years) earnings growth rate of 10.1%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates growth of 4.6% from the prior-year reported figure.
Lockheed Martin (LMT - Free Report) : Its Missiles and Fire Control business unit develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers. Some of its products are the PAC-3 family of missiles, M270, RRPR, THHAD and a few more.
Lockheed has a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for LMT’s 2024 sales implies growth of 2.7% from the prior-year reported figure.
General Dynamics (GD - Free Report) : Its Ordnance and Tactical Systems division creates, develops and manufactures an extensive array of highly advanced weapon systems for use by ground troops. It is the sole producer and system integrator of the 2.75-inch (70mm) Hydra-70 family of rockets.
General Dynamics’ long-term earnings growth rate is 10.8%. The Zacks Consensus Estimate for GD’s 2024 sales indicates an improvement of 10.1% from the prior-year reported figure.
Price Movement
In the past six months, shares of RTX have surged 38.5% compared with the industry’s growth of 16.2%.
Image Source: Zacks Investment Research
Zacks Rank
RTX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.