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Raytheon (RTX) Secures Deal to Support RAM 2B Guided Missile

Raytheon Technologies Corp’s RTX business segment, Raytheon Missile and Defense  recently clinched a modification contract to procure Rolling Airframe Missile (RAM) Block 2B guided missile round pack requirements. The award has been offered by the Naval Sea Systems Command, Washington, D.C.

Valued at $60.4 million, this contract is projected to get completed by January 2026. The deal will serve the U.S. Navy and Federal Republic of Germany.

The majority of work related to this contract will be executed in Germany’s Ottobrunn.

How Will the Deal Favor Raytheon?

Increasing geopolitical tensions worldwide have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, missile defense has steadily become pivotal in a nation’s defense strategy. With the United States being the world’s largest weapon supplier and Raytheon being a prominent U.S. missile maker, the increased missile defense adoption by nations offers the company solid growth opportunities.

Raytheon’s RAM guided missile weapon system is the world's most modern ship self-defense weapon and is designed to provide exceptional protection for ships of all sizes. RAM is currently deployed on more than 165 ships in 11 countries, ranging from 500-ton fast attack craft to 95,000-ton aircraft carriers. With these advanced weaponry in its portfolio, Raytheon enjoys solid demand in the defense space. The latest contract is expected to boost the company’s top line in the coming quarters.

Looking Ahead

Per a report by the Allied Market Research firm, the global rocket and missile market is projected to expand at a CAGR of 4.2% during the 2022-2031 period to reach $82 million by 2031. Such massive growth projections indicate solid opportunities for Raytheon Technologies, Northrop Grumman NOC, Lockheed Martin LMT and Boeing BA, which specialize in developing technologically advanced missiles.

Northrop Grumman’s missile defense program includes AGM-88E advanced anti-radiation guided missiles, the Ground Based Strategic Deterrent weapon system and rocket propulsion systems.

Northrop boasts a four-quarter average earnings surprise of 0.15%. The stock has a long-term earnings growth rate of 2.9%.

Lockheed Martin’s missile defense program includes the Patriot Advanced Capability-3 (PAC-3) and Terminal High Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.

Lockheed boasts a four-quarter average earnings surprise of 5.62%. The stock has a long-term earnings growth rate of 6.2%.

Likewise, Boeing’s Integrated Air & Missile Defense portfolio includes Arrow 3, which offers regional missile defense capabilities to enable an effective response to short and medium-range ballistic missiles.

The Zacks Consensus Estimate for Boeing’s 2022 sales suggests an improvement of 6% over 2021’s reported figure. The stock has a long-term earnings growth rate of 4%.

Price Performance

In the past year, Raytheon Technologies’ shares have rallied 7.7% against the industry’s 2.1% decline.

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Zacks Rank

Raytheon Technologies carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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