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Textron's (TXT) Arm Inks $12.3M Deal to Offer Support to UAS

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Textron Inc.’s (TXT - Free Report) business unit, Textron Systems Corp., recently clinched a modification contract to support the unmanned aircraft system (“UAS”). Valued at $12.3 million, the contract is expected to be complete in June 2023.

Details of the Deal

The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD. Per the deal, Textron Systems will offer intelligence, surveillance and reconnaissance (“ISR”) data collection support services to UAS. The modification contract exercises an option to provide services to the Department of Defense and other government agencies along with supporting domestic and overseas contingency operations.

The work involved in the deal will be carried out in Hunt Valley, MD and at multiple locations outside the continental United States.

Textron Systems’ Role in ISR

Textron Systems is a leading developer of data analysis and image processing software for geospatial intelligence. Its RemoteView provides premier analytical tools and extensions to quickly enhance the imagery and gain valuable perspective for essential mission planning and operational support.

Textron’s Optice is a user-friendly real-time visualization and exploitation tool purpose-built to enhance interactions with full-motion videos and other data sources. Optice delivers a series of advanced capabilities that enrich data and help shorten the time from data acquisition to action.

Textron also offers, SeeGEO is a web-enabled platform that has been built to solve problems across the spatial-temporal spectrum. Providing support for multi-modal data, SeeGEO delivers a sophisticated toolset for exploitation packaged in a highly collaborative environment.

Opmeta is a high-performance video encoding solution that blends high-performance hardware with integrated software to provide a powerful solution to meet almost any video encoding requirement.

Hence, TXT’s impressive product offering aid in effective surveillance in military missions is likely to witness a strong order inflow going ahead. The latest modification contract win is a bright example of that.

Growth Prospects

The demand for an effective and technologically advanced ISR system is likely to increase manifold, buoyed by the increased inclusion of unmanned systems in defense due to their cost effectiveness compared to manned aircraft and a zero-mortality rate.

In this context, per the report from Mordor Intelligence, the ISR market is poised to witness a CAGR of more than 4.5% during the 2022-2027 period. Such upbeat growth projections exemplify immense opportunities for Textron, which is a leading defense contractor in providing ISR services.

A few defense majors that stand to capitalize on the tremendous growth opportunity in the ISR market are Raytheon Technologies (RTX - Free Report) , Lockheed Martin (LMT - Free Report) and Northrop Grumman (NOC - Free Report) .

Raytheon’s ISR systems offer multiple modes of intelligence data collection and analysis, which include network-centric intelligence sources, high-definition surveillance and reconnaissance imagery and real-time command and control, while enabling the secure transfer and sharing of actionable information simultaneously among many users for rapid decision-making.

Raytheon’s long-term earnings growth rate is pegged at 10.5%. Shares of RTX have returned 8.3% value to investors in the past year.

Lockheed Martin provides innovative, cost-efficient airborne and ground system configurations that address a wide range of ISR requirements. It provides airborne ISR systems, ground-based ISR processing systems and integrated operations & intelligence systems.

Lockheed Martin boasts a long-term earnings growth rate of 5.7%. LMT shares have returned 13% in the past year.

Northrop Grumman’s Autonomous Systems provide unmanned autonomous aircraft systems, including high-altitude long-endurance, strategic ISR systems and vertical take-off and landing tactical ISR systems. Its programs include MQ-4C Triton, RQ-4 Global Hawk, North Atlantic Treaty Organization Alliance Ground Surveillance and MQ-8B and MQ-8C Fire Scout.

Northrop Grumman’s long-term earnings growth rate is pegged at 6.1%. Shares of NOC have returned 28.6% value to investors in the past year.

Price Movement

In the past month, TXT shares have rallied 3.6% compared with the industry’s growth of 2.5%.

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Zacks Rank

Textron 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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