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Raytheon (RTX) Wins $985M Deal to Deliver Hypersonic Missile

·3 min read

Raytheon Technologies Corp.’s RTX business unit, Missile and Defense, recently clinched a contract involving the initial delivery of the Hypersonic Attack Cruise Missile (HACM). The award has been offered by the Air Force Life Cycle Management Center, Armament Directorate, Eglin Air Force Base, FL.

Details of the Deal

Valued at $985.3 million, the contract is projected to be completed by March 2027. Per the terms of the deal, Raytheon will provide system design and develop the HACM weapon through model-based critical design review, qualification, integration, manufacturing and testing.

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

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.

Notably, HACM is a first-of-its-kind weapon developed in conjunction with the Southern Cross Integrated Flight Research Experiment (SCIFiRE), a U.S. and Australia project arrangement. HACM, with the help of Scramjet engines, is able to reach targets more quickly than traditional missiles, allowing it to potentially evade defensive systems. No doubt, such an advanced weapon will bolster Raytheon’s position in the U.S. defense space, thereby boosting 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.

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 64.46%. The stock has a long-term earnings growth rate of 5.4%.

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 14.8% from the 2021 reported figure. The stock has a long-term earnings growth rate of 4%.

Similarly, 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 3.92%. The stock has a long-term earnings growth rate of 2.2%.

Price Performance

In the past year, Raytheon Technologies’ shares have lost 4.3% compared with the industry’s 8.1% decline.

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Zacks Investment Research


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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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