Raytheon Technologies Corp.’s (RTX - Free Report) Missiles and Defense segment recently secured a contract for upgradingthe advanced medium range air to air missile (AMRAAM) system. Work related to the deal will be executed in Tucson, AZ.
In particular, the company will deliver software development activities for the AMRAAM. The deal, awarded by the Air Force Life Cycle Management Center, Eglin Air Force Base, FL, is scheduled to be completed by Sep 30, 2026.
The contract is worth $125 million.
Growing Missile Demand & AMRAAM
Over the past decade, rapidly growing inter country as well as intra country conflicts around the globe have prompted nations to bulk up their arsenal count, in which missiles have played a vital role. Consequently, developed nations like the United States and Europe along with emerging nations like India, Japan, South Korea and a few more have been ramping up their defense capabilities.
Raytheon’s AMRAAM is a versatile combat-proven air dominance weapon and thus enjoys solid demand from varied countries worldwide.
AMRAAM is currently being used by 37 countries across the globe, including the United States. This missile has been integrated in some of the renowned fighter jets like Boeing’s (BA - Free Report) F-15 and F/A-18 and Lockheed Martin’s (LMT - Free Report) F-22 to name a few.
Deal Benefits for Raytheon Technologies
Thanks to its wide range of combat-proven defense products, Raytheon Technologies continues to receive ample orders from the Pentagon and its foreign allies. During the second quarter, the company won a handful of such notable contracts. Consequently, it witnessed record bookings of $10.16 billion, which translated into a solid backlog of $73.13 billion by the end of the second quarter.
These make us optimistic of the revenue growth prospects of the company, which, in turn, will boost its bottom line, over the long run. Impressively the latest contract win will enable this defense major to record similar backlog in the coming days as well, thereby bolstering its growth trajectory.
The latest software update that Raytheon will offer to AMRAAM is a further indication of growing demand for more upgraded missiles. Such demand boosts the chances of this missile maker to win more similar contracts in the future.
The U.S. fiscal 2021 defense budget proposal provisioned $20.3 billion for major war-fighting investments in missile defense. This should enable Raytheon Technologies to clinch more contracts related to missile defense systems and associated services, considering the company’s proven expertise in varied missile systems.
Other major U.S. missile defense players like General Dynamics (GD - Free Report) , Boeing and Lockheed Martin are also expected to benefit from the aforementioned budget provision.
Price Performance & Zacks Rank
Raytheon Technologies’ stock has lost 5.2% in the past three months compared with the industry’s decline of 3%.
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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