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Raytheon (RTX) Wins $264M Deal to Aid AIM-9X Missile Production

Raytheon Technologies Corp.’s RTX business segment, Missiles and Defense unit, recently clinched a modification contract involving the manufacture and delivery of the AIM-9X missile and associated spare parts. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $263.7 million, the contract is projected to be completed by August 2026. Per the terms of the deal, Raytheon will provide 571 AIM-9X Block II all-up-round tactical missiles and 48 Block II captive air training missiles, along with 185 all-up-round containers.

The company will also supply 11 spare advanced optical target detectors, eight spare advanced optical target detector containers, 31 spare Block II guidance units and a few more spare parts.

The contract is set to serve the U.S. Navy and Air Force as well as Foreign Military Sales customers.

A major portion of the work related to this deal will be carried out in North Logan, UT; Tucson, AZ; and Linthicum Heights, MD.

Growing Missile Demand & AIM-9X

Over the past decade, rapidly growing inter-country as well as intra-country conflicts have prompted nations to bulk up their arsenal, wherein missiles play a vital role. Consequently, developed nations like the United States and Europe, along with emerging nations like India, Japan, South Korea and a few more have been ramping up their defense capabilities.

Raytheon’s AIM-9X Sidewinder missile is the most advanced infrared-tracking, short-range, air-to-air and surface-to-air missile in the world. It is configured for easy installation in a range of modern aircraft, including Boeing’s F-15, F/A-18, E/A-18G, and Lockheed’s F-22 and F-35 fighters.

The latest variant of AIM-9X Sidewinder, the AIM-9X Block II missile features a redesigned fuse and a digital ignition safety device that enhances ground handling and in-flight safety. These characteristics have been boosting the demand for AIM-9X, as evident from the latest contract win.

Growth Prospects

Per Mordor Intelligence, the missiles and missile defense systems market is estimated to register a CAGR of more than 10% during 2020-2025. The growing conflicts and increasing investments in missile defense systems are expected to drive the market, thereby creating solid growth opportunities for Raytheon, a prominent missile maker.

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

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

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 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 and the Terminal High Altitude Area Defense missile.

LMT boasts a long-term earnings growth rate of 6.2%. The company delivered a four-quarter average earnings surprise of 7.46%.

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.

GD boasts a long-term earnings growth rate of 8.9%. The Zacks Consensus Estimate for GD’s 2023 sales indicates growth of 5% from the 2022 reported figure.

Price Movement

In the past year, Raytheon’s shares have lost 1.2% compared with the industry’s 1.5% drop.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

Raytheon 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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