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Raytheon (RTX) Wins $250M Deal for StromBreaker Bomb

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Raytheon Technologies Corp.’s RTX business segment, the Missiles and Defense unit, recently won a contract, involving the integrated engineering change proposal for the StormBreaker Small Diameter Bomb II (SDB II). The award has been offered by the Air Force Life Cycle Management Center, Eglin Air Force Base, FL.

Valued at $250 million, the contract is projected to be completed by Aug 22, 2027. Per the deal, Raytheon will provide design, development, integration, test and production engineering for changes to the SDB II GBU-53/B technical and production baseline.

Work related to this deal will be performed in Tucson, AZ.

Advantages of the StormBreaker Bomb

Raytheon Technologies' SDB II enables warfighters to hit moving targets in all-weather conditions, especially when the visibility is limited. SDB-II is capable of three modes: a millimeter-wave radar that detects and tracks targets through all weather, imaging infrared for improved target discrimination and a semi-active laser to track lasers in the air or on the ground. Further, the weapon can fly more than 45 miles to strike mobile targets.

What's Favoring Raytheon Technologies?

Increasing geopolitical tensions across the globe have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, missile defense has been playing a pivotal role in a nation's defense strategy. To this end, Raytheon Technologies' Missiles & Defense unit secures significant awards from the United States as well as international customers due to its high-end, combat-proven arsenals. The latest contract win is a testament to that.

The U.S. fiscal 2022 defense budget proposal provisioned $20.4 billion for investments in missile defense. This should enable Raytheon Technologies to clinch more contracts, like the latest one, related to various missile defense systems and associated services.

Growth Prospects

Per Mordor Intelligence, the missiles and missile defense systems market is estimated to register a CAGR of more than 10% between 2020 and 2025. The growing conflicts between various countries and the increasing number of investments being made by nations in missile defense systems are expected to drive the market. This, in turn, is likely to create solid growth opportunities for Raytheon, a prominent missile maker.

Major missile makers like Northrop Grumman NOC, Lockheed Martin LMT and General Dynamics GD are also expected to benefit, considering the aforementioned growth prospects of the missiles and missile defense market.

Northrop is a prominent developer of missile systems and counter systems, including strategic deterrents as well as subsystems and components. To strengthen its position in the missile market, Northrop acquired Orbital ATK in 2018, which used to be one of the industry leaders in providing missile components across the air-, sea and land-based systems.

Northrop reported third-quarter 2021 earnings of $6.63 per share, which surpassed the Zacks Consensus Estimate by 11.8%. NOC stock has rallied 25.8% in the past year.

Lockheed’s Missiles and Fire Control business unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products include the PAC-3 missile as well as the Terminal High Altitude Area Defense missile.

Lockheed’s third-quarter 2021 adjusted earnings of $6.66 per share surpassed the Zacks Consensus Estimate by a whopping 239.8%. LMT boasts a long-term earnings growth rate of 3.6%.

General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.

General Dynamics’ third-quarter 2021 earnings of $3.07 per share from continuing operations surpassed the Zacks Consensus Estimate by 3.4%. GD stock has rallied 37.6% in the past year.

Price Movement

In the past year, Raytheon Technologies’ shares have surged 20.3% compared with the industry’s 9.1% growth.

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Zacks Rank

Raytheon Technologies 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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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

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