Raytheon Company’s (RTN - Free Report) business unit, Missile Systems (MS) recently secured a $768.3 million contract to manufacture advanced medium range air to air missile (AMRAAM). Work related to the deal will be executed in Tucson, AZ.
Details of the Deal
Apart from production of these missiles, the MS unit will offer captive air training missiles, guidance sections, AMRAAM telemetry system, spares and other production engineering support hardware. The deal was awarded by the Air Force Life Cycle Management Center, Eglin Air Force Base, FL, and is scheduled to be completed by Feb 28, 2023.
This contract will serve the U.S. Air Force and Navy and will also involve foreign military sales.
Attributes of AMRAAM
Raytheon’s AMRAAM is a versatile combat-proven air dominance weapon. Its capabilities have been fully demonstrated in more than 4,200 test shots and 10 air-to-air combat victories. Notably, this weapon’s advanced active guidance section provides aircrew with a high degree of combat flexibility and lethality.
AMRAAM is currently used by 37 countries across the globe, including the United States. This missile has been integrated in some of the renowned fighter jets like Boeing’s (BA - Free Report) , F-15 and F/A-18, General Dynamics’ (GD - Free Report) F-16 and Lockheed Martin’s (LMT - Free Report) F-22 to name a few.
What’s Favoring Raytheon?
In recent times, missile defense plays a pivotal role in a nation’s defense strategy due to increasing geo-political tensions across the globe. With regard to the United States, the nation’s latest cross-border tiffs with Russia and North Korea have prompted the government to spend copiously on missiles.
As a result, Raytheon, a prominent U.S. missile maker, has been clinching significant awards for the enhancement of its missile defense systems with latest technologies and providing its end users with complex technical services. The latest acquired contact is one such example.
Such contract wins tend to boost revenue growth for the company’s MS business unit. Notably, the MS division recorded third-quarter 2019 net sales of $2,165 million, reflecting 4% improvement from the year-ago quarter. Considering the latest deal and a few other contracts secured by the company in recent times, we expect this segment to show top-line strength in the coming days.
Furthermore, the U.S. fiscal 2020 defense budget provisioned for major war-fighting investments worth almost $12 billion on missile defense. This should enable Raytheon to clinch more contracts related to missile defense systems and associated services like the latest one.
In a year’s time, Raytheon has gained 48.3% compared with the industry’s 48% growth.
Raytheon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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