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Raytheon (RTX) Wins $140M Deal to Supply AN/APG-79 Radars

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Raytheon Technologies Corp. (RTX - Free Report) recently clinched a modification contract for supplying 36 AN/APG-79(V)4 radar systems to support radar integration into the C/F-18A aircraft. The Naval Air Systems Command, Patuxent River, MD awarded this agreement.

Details of the Deal

Valued at $140.4 million, the contract is expected to be completed in March 2024 and will serve the government of Canada. Per the terms, Raytheon will provide supplies and support including software, obsolescence management, engineering support, and associated technical, financial, and administrative data in relation to AN/APG-79(V)4 radar integration.

The majority of  the work related to this deal will be executed in Forest, MS, and El Segundo, CA.

Importance of the APG-79 Radar System

The combat-proven APG-79 AESA radar system substantially increases the power of Boeing’s (BA) family of F/A-18 aircraft by providing active electronic beam scanning, thus allowing the radar beam to be steered at enormous speeds.

Further, its agile beam enables the multimode radar to interleave in near-real time so that pilots and crew can use both modes, simultaneously. The radar system also optimizes situational awareness and provides superior air-to-air and air-to-surface capabilities.

Radars & Raytheon

With the rapid escalation of geopolitical tensions globally in recent times, developed and developing nations have been boosting their defense arsenal significantly. Radars constitute a vital part of this arsenal.

Empirically, demand for military radar systems has expanded manifold in recent times, driven by factors like the rise in defense spending of emerging economies, an increase in regional tensions, and inter-country conflicts that have increased threats from missiles and aircraft. This in turn has been benefiting radar manufacturing companies like Raytheon in the form of contract wins like the latest one.

Notably, Raytheon’s product portfolio consists of varied radars like integrated air and missile defense radars, ballistic missile radars, surveillance radars as well as air dominance radars. Radars like AN-SPY 6, AN-TPY-2, APG-79, and APG-82 are some of its combat-proven products that enjoy solid demand in the global military radar market.

Growth Prospects

Per Markets and Markets Research firm, the global military radar market is expected to reach $17.4 billion by 2025 at a CAGR of 4.4% from 2020. Such growth projections for the aforementioned market should benefit prominent radar manufacturers like Raytheon Technologies, Lockheed Martin (LMT - Free Report) , L3Harris Technologies (LHX - Free Report) , and Northrop Grumman (NOC - Free Report) .

Notably, Lockheed’s product portfolio includes various radar and electro-optical/infrared sensor systems like AN/APY-9 radar, airborne ground surveillance radar systems, IRST21 Sensos system, AN/TPQ-53 radar systems, SPY-7, long-range discrimination radar, and a few more.

L3Harris manufactures combat-proven radars like SPS-48 land-based surveillance radar, the AN/APY-11 Multimode radar, the Tactical Air Surveillance radar, the AN/SPS-48G Long range 3D surveillance radar, and many more.  

Northrop’s broad portfolio of products comprises radars like AN/APG-83 scalable agile beam radar, AN/ASQ-236 Dragon’s eye radar pod as well as AN/APG-81 and AN/APG-71 for F-35 and F-22 jets, respectively.

Price Performance

Raytheon’s shares have gained 39.5% in the past year compared with the industry’s increase of 31.9%.

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Zacks Rank

Raytheon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.