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Raytheon (RTX) Wins $578M Deal to Support Standard Missile-2
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Raytheon Technologies, Corp.’s (RTX - Free Report) business segment, Missiles & Defense, recently clinched a modification contract for procuring requirements involving the production of Standard Missile -2 (SM-2). The award has been offered by the Naval Sea Systems Command, Washington, DC.
Details of the Deal
Valued at $578.3 million, the deal will support the U.S. Navy and the governments of Korea, Denmark, Taiwan, Netherlands, Spain, Chile, Japan and Germany. The majority of work related to this contract will be performed in Tucson, AZ.
Per the terms, Raytheon will supply instrumentation kits, engineering services and spares for the production of SM-2. The contract is expected to get completed by December 2026.
Raytheon’s Missile Strength
Raytheon Missiles & Defense (RMD) is a leading designer, developer, integrator producer and sustainer of integrated air and missile defense systems, with the unit serving as a prime contractor or major subcontractor on numerous missile and related programs with the U.S. Department of Defense.
The SM-2 missile chases threats closer to the water's surface, defending against anti-ship missiles and aircraft out to 90 nautical miles. RMD has restarted its SM-2 production line after multiple countries pooled resources to make a "bundle" purchase. In 2020, Canada was the latest country to add Standard Missile-2 Block IIIC in its surface combatant ships through a $500 million purchase deal.
The aforementioned developments reflect the solid demand that Raytheon’s SM-2 missile enjoys worldwide, with more than 2,700 successful live firings so far. Considering this, we expect the company to witness more inflow of contracts, involving production and associated upgrade of these missiles, like the latest one.
Growth Prospects
Per Mordor Intelligence, the missiles and missile defense systems market is estimated to register a CAGR of more than 10% between 2020 and 2025. The growing conflicts between various countries and the increasing number of investments in missile defense systems being made by nations are expected to drive the market, thereby creating solid growth opportunities for Raytheon, which is a prominent missile maker.
Other major missile makers like Northrop Grumman (NOC - Free Report) , Lockheed Martin (LMT - Free Report) and General Dynamics (GD - Free Report) are also expected to benefit considering the aforementioned growth prospects of the missile and missile defense market.
Northrop is a prominent developer of missile systems, and counter systems, including strategic deterrents, as well as subsystems and components. In fact, to strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air-, sea- and land-based systems.
Northrop reported third-quarter 2021 earnings of $6.63 per share, which surpassed the Zacks Consensus Estimate by 11.8%. NOC stock has gained 25.9% in the past year.
Lockheed’s Missiles and Fire Control business unit develops, manufactures, and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile as well as the Terminal High Altitude Area Defense missile.
Lockheed’s third-quarter 2021 adjusted earnings of $6.66 per share surpassed the Zacks Consensus Estimate by a whopping 239.8%. LMT boasts a long-term earnings growth rate of 3.6%
General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.
General Dynamics’ third-quarter 2021 earnings from continuing operations of $3.07 per share surpassed the Zacks Consensus Estimate by 3.4%. GD stock has gained 37.2% in the past year.
Price Movement
In the past year, Raytheon Technologies’ shares have gained 18.3% compared with the industry’s 3.6% growth.
Image: Bigstock
Raytheon (RTX) Wins $578M Deal to Support Standard Missile-2
Raytheon Technologies, Corp.’s (RTX - Free Report) business segment, Missiles & Defense, recently clinched a modification contract for procuring requirements involving the production of Standard Missile -2 (SM-2). The award has been offered by the Naval Sea Systems Command, Washington, DC.
Details of the Deal
Valued at $578.3 million, the deal will support the U.S. Navy and the governments of Korea, Denmark, Taiwan, Netherlands, Spain, Chile, Japan and Germany. The majority of work related to this contract will be performed in Tucson, AZ.
Per the terms, Raytheon will supply instrumentation kits, engineering services and spares for the production of SM-2. The contract is expected to get completed by December 2026.
Raytheon’s Missile Strength
Raytheon Missiles & Defense (RMD) is a leading designer, developer, integrator producer and sustainer of integrated air and missile defense systems, with the unit serving as a prime contractor or major subcontractor on numerous missile and related programs with the U.S. Department of Defense.
The SM-2 missile chases threats closer to the water's surface, defending against anti-ship missiles and aircraft out to 90 nautical miles. RMD has restarted its SM-2 production line after multiple countries pooled resources to make a "bundle" purchase. In 2020, Canada was the latest country to add Standard Missile-2 Block IIIC in its surface combatant ships through a $500 million purchase deal.
The aforementioned developments reflect the solid demand that Raytheon’s SM-2 missile enjoys worldwide, with more than 2,700 successful live firings so far. Considering this, we expect the company to witness more inflow of contracts, involving production and associated upgrade of these missiles, like the latest one.
Growth Prospects
Per Mordor Intelligence, the missiles and missile defense systems market is estimated to register a CAGR of more than 10% between 2020 and 2025. The growing conflicts between various countries and the increasing number of investments in missile defense systems being made by nations are expected to drive the market, thereby creating solid growth opportunities for Raytheon, which is a prominent missile maker.
Other major missile makers like Northrop Grumman (NOC - Free Report) , Lockheed Martin (LMT - Free Report) and General Dynamics (GD - Free Report) are also expected to benefit considering the aforementioned growth prospects of the missile and missile defense market.
Northrop is a prominent developer of missile systems, and counter systems, including strategic deterrents, as well as subsystems and components. In fact, to strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across air-, sea- and land-based systems.
Northrop reported third-quarter 2021 earnings of $6.63 per share, which surpassed the Zacks Consensus Estimate by 11.8%. NOC stock has gained 25.9% in the past year.
Lockheed’s Missiles and Fire Control business unit develops, manufactures, and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile as well as the Terminal High Altitude Area Defense missile.
Lockheed’s third-quarter 2021 adjusted earnings of $6.66 per share surpassed the Zacks Consensus Estimate by a whopping 239.8%. LMT boasts a long-term earnings growth rate of 3.6%
General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.
General Dynamics’ third-quarter 2021 earnings from continuing operations of $3.07 per share surpassed the Zacks Consensus Estimate by 3.4%. GD stock has gained 37.2% in the past year.
Price Movement
In the past year, Raytheon Technologies’ shares have gained 18.3% compared with the industry’s 3.6% growth.
Zacks Rank
Raytheon Technologies currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.