Raytheon Technologies Corp.’s ( RTX Quick Quote RTX - Free Report) business unit, Intelligence and Space, secured a contract to support F/A-18 and EA-18G aircraft programs. The award has been offered by the Naval Air Warfare Center Weapons Division, China Lake, CA. Details of the Deal
Valued at $372.1 million, the contract is expected to be completed by June 2028. Per the terms of the deal, Raytheon will provide updates, improvements and enhancements of tactical capabilities, sensor instrumentation, and instrumentation interfaces to support F/A-18 and EA-18G software blocks.
Majority of the work related to this deal will be executed in El Segundo, CA.
Raytheon & Sensors
Raytheon’s sensor products include the Multi-Spectral Targeting System product family of sensors, Electro Optical Distributed Aperture System, AN/APG-79 AESA Radar, AN/APG-82(V)1 AESA Radar, Next Generation Jammer Mid-Band 5 Table of Contents, Global Positioning System Next-Generation Operational Control System, Next Generation Overhead Persistent Infrared and Future Operationally Resilient Ground Evolution.
As renowned combat jets, both F/A-18 and EA-18G enjoy solid demand in the military aircraft space. This, in turn, bolsters order flow for these jets as well as the associated contracts for upgrading them.
To this end, it is imperative to mention that Raytheon provides precision weapons, radars, sensors, avionics and other systems for F/A-18 jets, and the Next Generation Jammer Mid-Band for EA-18G Growler. Thus, a contract flow for these combat jets also ushers in orders for upgrading them. This, in turn, benefits stocks like Raytheon.
With rapid escalation of geopolitical tensions worldwide, developed as well as developing nations have been boosting their defense arsenal significantly. Radars and sensors constitute a vital part of their defense equipment. While radars have been in use since World War II for locating threats and targets, they are now being used for multiple purposes like ground surveillance, missile control, fire control, air traffic control, moving target indication, weapons location and vehicle search.
Demand for military radar and sensor systems has expanded manifold in recent times, driven by factors like a rise in defense spending for emerging economies, and an increase in regional tensions and inter-country conflicts. This rise in wars and tensions has increased threats from missiles and aircraft.
Per Fortune Business Insights firm, the global military radar market is expected to witness a CAGR of 6.3% from 2021 and reach $22.1 billion by 2028. Such growth projections for the aforementioned market should benefit prominent radar manufacturers like Raytheon,
Northrop Grumman ( NOC Quick Quote NOC - Free Report) , Lockheed Martin ( LMT Quick Quote LMT - Free Report) and L3Harris Technologies ( LHX Quick Quote LHX - Free Report) .
Northrop is a pioneer in Active Electronically Scanned Array (AESA) radars and has been at the forefront of AESA innovations for more than 60 years. The company’s broad portfolio of products comprises of AN/APG-83 scalable, agile beam radar and AN/ASQ-236 Dragon’s eye radar pod. The portfolio also includes AN/APG-81 and AN/APG-71 for F-35 and F-22 jets, respectively.
NOC boasts a long-term earnings growth rate of 3.8%. The Zacks Consensus Estimate for NOC’s 2023 sales indicates an improvement of 4.7% from the 2022 reported figure.
Lockheed’s infrared sensor systems provide advanced precision targeting, navigation, threat detection and next generation intelligence, surveillance and reconnaissance capabilities. The company’s notable radar portfolio consists of SPY-7, AN/TPQ-53 and AN/APY-9.
LMT boasts a long-term earnings growth rate of 6.2%. The stock has risen 7.2% in the past year.
L3Harris is the manufacturing company for AN/SPS-48G naval radar, Symphony Airfield Radar Systems, Tactical Air Surveillance radars and a few more. Its maritime sensors include Surface Ship TB-37 Multi-Function Towed Arrays, Submarine Towed Arrays as well as Mobile Surveillance Towed Arrays.
L3Harris boasts a long-term earnings growth rate of 2.6%. The Zacks Consensus Estimate for LHX’s 2023 sales indicates an improvement of 3.7% from the 2022 reported figure.
In the past year, Raytheon’s shares have risen 1.8% compared with the
industry’s 1.7% growth. Image Source: Zacks Investment Research Zacks Rank
Raytheon carries a Zacks Rank #3 (Hold) at present. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.