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RTX Secures a Contract to Support Dual Band Radar Systems

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RTX Corp. (RTX - Free Report) recently secured a modification contract involving Dual Band Radar (DBR) systems. The award has been offered by the Naval Sea Systems Command, Washington, D.C.

Details of the Deal

Valued at $53.4 million, the contract is expected to be completed by November 2024. Per the terms of the contract, RTX will provide design agent and technical engineering follow-on requirements to support the DBR systems installed aboard CVN78 and DDG1000 class ships.

A major portion of the work related to this deal will be executed in Tewksbury and Marlborough, MA.

Significance of Dual Band Radar

RTX’s DBR program is the first radar system of the U.S. Navy fleet, capable of operating simultaneously on two frequency ranges (S-band and X-band), coordinated by a single-resource manager. It combines the functionality of the X-band AN/SPY-3 Multifunction Radar and the S-band Volume Surveillance Radar (VSR) to provide an unprecedented level of performance and capability to detect as well as track hostile targets.

DBR can operate 24x7 during extended missions with an operational availability of more than 95%. Additionally, the program requires no dedicated operator or manned display consoles. It is directed by the command and control-level personnel through the Ship Self Defense System, an open-architecture solution that integrates the ship's systems through a single enterprise network.

Such remarkable features of DBR that can effectively assist in military operations have resulted in a steady inflow of orders involving this radar system. The latest contract win is an example of that. This, in turn, is likely to boost RTX’s revenues from the radars arena.

Prospects

Nations are strengthening their defense capabilities amid rising geopolitical tensions. In this context, demand for an effective radar system, which boasts the features of next-generation technology-based warfare capabilities, has been gaining momentum due to the growing importance of radars in military surveillance.

Per a Mordor Intelligence report, the global military radars market is anticipated to witness a CAGR of 5.3% during the 2023-2028 period. This exhibits strong growth prospects for RTX, which boasts a product portfolio consisting of varied radars like integrated air and missile defense radars, ballistic missile radars, surveillance radars and air dominance radars. Such diversity in radar system technology tends to provide RTX with a competitive edge in the military radar system market.

The aforementioned market’s growth prospects should also benefit other radar-manufacturing defense majors, which have been discussed below.

Northrop Grumman (NOC - Free Report) has been at the forefront of active electronically scanned array radar innovations for more than 60 years. The AESA radars provide unparalleled battlespace situational awareness and air-to-air as well as air-to-ground superiority. A few of Northrop Grumman’s renowned radars are the AN/AAQ-24(V) Directional Infrared Countermeasure system, the AN/APG-77 AESA radar and the AN/APG-81 AESA fire control radar.

Northrop Grumman has a long-term earnings growth rate of 2.4%. The Zacks Consensus Estimate for NOC’s 2023 sales implies a 6.4% improvement from the 2022 reported figure.

Lockheed Martin (LMT - Free Report) is pioneering the latest radar systems and technology. Its product portfolio consists of varied radars like Longbow FCR, AN/APY-9, IRST21 Sensor System, LANTIRN ER, Legion Pod and M-TADS/PNVS, which are some of its combat-proven products that enjoy solid demand in the global military radar market.

Lockheed Martin’s long-term earnings growth rate is 8.6%. The stock boasts an average earnings surprise of 4.35% for the last four quarters.

BAE Systems (BAESY - Free Report) is at the forefront of radar tracking technology, delivering systems that provide precision tracking data to range commanders with superior situational awareness and various target-tracking solutions. It delivered numerous state-of-the-art land-based fixed, transportable, mobile and shipborne precision Time Space and Position Information tracking radar systems to domestic and international customers.

BAE Systems boasts a long-term earnings growth rate of 14%. The consensus estimate for BAESY’s 2023 sales implies a 33.6% improvement from the 2022 reported figure.

Price Movement

In the past year, shares of RTX have lost 14.7% compared with the industry’s decline of 7.9%.

Zacks Investment Research
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Zacks Rank

RTX 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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