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Raytheon Wins $30M Deal to Support Block IV Tomahawk Missile
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Raytheon Company’s Missiles Systems business unit recently secured a $29.6-million contract for upgrading test equipment related to the Block IV Tomahawk missile. These include the upgrading of System Integration Laboratory, the Air Vehicle System Integration Laboratory, automated flight test and associated test equipment.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of work related to the deal will get executed in Tucson, AZ. The deal is scheduled to get completed by June 2021.
Advantages of the Tomahawk Missile
The Tomahawk Land Attack Missile is a long-range, all-weather, subsonic cruise missile used for deep land attack warfare. Tomahawk cruise missiles are designed to fly at extremely low altitudes at high subsonic speeds, and piloted over an evasive route by several mission tailored guidance systems.
The missile can be launched from a ship or submarine and fly into heavily defended airspace more than 1,000 miles away to conduct precise strikes on high-value targets. The latest Block IV variant includes a two-way satellite data-link that enables the missile to be retargeted in flight to preprogrammed, alternate targets.
What Favors Raytheon?
Increasing geo-political tensions across the globe have prompted nations to strengthen their defense systems manifold, especially missile defense systems. To reap benefits of this situation, Raytheon has already begun to work on modernization programs for its Tomahawk Block IV missile. Some of these missiles will now be upgraded with enhanced maritime strike capabilities, while others will have joint, multiple-effects warhead. It will also add navigation and communication upgrades to all Block IV variants to give the missiles another 15-year service life. Such upgrades are expected to drive demand for Raytheon’s Tomahawk missiles and in turn projected to usher in more contract wins, like the latest one.
In March 2019, the U.S. government proposed the fiscal 2020 defense budget, which includes a spending plan of $13.6 billion on missile defense. Once approved, the increased spending provision will win more contracts for Raytheon’s Tomahawk Missiles along with other major missile programs.
Looking Ahead
Per Markets and Markets, the rocket and missile market is projected to grow from $55.5 billion in 2017 to $70 billion by 2022, at a CAGR of 4.74%. Such massive growth projections, thereby, offer Raytheon ample opportunities to enhance its share in the global missile market.
Price Performance
Shares of the company have gained 10.8% in the past six months compared with the industry’s growth of 24.4%.
Zacks Rank & Key Picks
Raytheon currently carries a Zacks Rank #3 (Hold).
Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 3.7% to 84 cents in the past 60 days.
Northrop Grumman came up with average positive earnings surprise of 18.50% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.26% to $19.42 in the past 60 days.
Leidos Holdings came up with average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 1.54% to $4.60 in the past 60 days.
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Raytheon Wins $30M Deal to Support Block IV Tomahawk Missile
Raytheon Company’s Missiles Systems business unit recently secured a $29.6-million contract for upgrading test equipment related to the Block IV Tomahawk missile. These include the upgrading of System Integration Laboratory, the Air Vehicle System Integration Laboratory, automated flight test and associated test equipment.
The contract was awarded by the Naval Air Systems Command, Patuxent River, MD. Majority of work related to the deal will get executed in Tucson, AZ. The deal is scheduled to get completed by June 2021.
Advantages of the Tomahawk Missile
The Tomahawk Land Attack Missile is a long-range, all-weather, subsonic cruise missile used for deep land attack warfare. Tomahawk cruise missiles are designed to fly at extremely low altitudes at high subsonic speeds, and piloted over an evasive route by several mission tailored guidance systems.
The missile can be launched from a ship or submarine and fly into heavily defended airspace more than 1,000 miles away to conduct precise strikes on high-value targets. The latest Block IV variant includes a two-way satellite data-link that enables the missile to be retargeted in flight to preprogrammed, alternate targets.
What Favors Raytheon?
Increasing geo-political tensions across the globe have prompted nations to strengthen their defense systems manifold, especially missile defense systems. To reap benefits of this situation, Raytheon has already begun to work on modernization programs for its Tomahawk Block IV missile. Some of these missiles will now be upgraded with enhanced maritime strike capabilities, while others will have joint, multiple-effects warhead. It will also add navigation and communication upgrades to all Block IV variants to give the missiles another 15-year service life. Such upgrades are expected to drive demand for Raytheon’s Tomahawk missiles and in turn projected to usher in more contract wins, like the latest one.
In March 2019, the U.S. government proposed the fiscal 2020 defense budget, which includes a spending plan of $13.6 billion on missile defense. Once approved, the increased spending provision will win more contracts for Raytheon’s Tomahawk Missiles along with other major missile programs.
Looking Ahead
Per Markets and Markets, the rocket and missile market is projected to grow from $55.5 billion in 2017 to $70 billion by 2022, at a CAGR of 4.74%. Such massive growth projections, thereby, offer Raytheon ample opportunities to enhance its share in the global missile market.
Price Performance
Shares of the company have gained 10.8% in the past six months compared with the industry’s growth of 24.4%.
Zacks Rank & Key Picks
Raytheon currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same sector are Wesco Aircraft Holdings, Inc. , Northrop Grumman Corp. (NOC - Free Report) and Leidos Holdings (LDOS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wesco Aircraft’s long-term growth estimates currently stand at 12%. The Zacks Consensus Estimate for 2019 earnings has increased 3.7% to 84 cents in the past 60 days.
Northrop Grumman came up with average positive earnings surprise of 18.50% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has increased 2.26% to $19.42 in the past 60 days.
Leidos Holdings came up with average positive earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 1.54% to $4.60 in the past 60 days.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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