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Raytheon (RTX) Wins Deal for Multi-Spectral Targeting Systems

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Raytheon Technologies Corp.RTX recently secured a contract to procure multi-spectral targeting systems (MTS) for the U.S. Navy Triton unmanned aircraft system and for the Royal Australian Air Force. The Naval Surface Warfare Center, Crane, IN awarded the deal.

Details of the Deal

Valued at $23.2 million, this contract aims to provide intelligence, surveillance and reconnaissance detection, identification and targeting capability in day/night operations for both manned and unmanned platforms through the MTS.Work related to this deal will be carried out in McKinney, TX.

The contract is scheduled to be completed by March 2023.

Significance of Multi-Spectral Targeting Systems

Raytheon Intelligence & Space's MTS has the ability to combine electro-optical/ infrared (EO/IR), laser designation and laser illumination in a single sensor package. It provides detailed intelligence data from the visual and infrared spectrum in support of the U.S. military, civilian and allied missions worldwide.

With approximately four million operational flight hours, the MTS sensors boast multiple fields of view, electronic zoom, multimode video tracking feature. Moreover, these are designed to incorporate future growth options and performance enhancements.

Due to its enhanced features suitable for various military missions, Raytheon Technologies has been witnessing significant order growth for MTS. To date, Raytheon Intelligence & Space has delivered more than 3,000 MTS sensors to the U.S. and international armed forces. It has successfully integrated 44 variants of the system in more than 20 rotary-wing, Unmanned Aerial Systems and fixed-wing platforms, reflecting strong demand for MTS.

Raytheon Technologies may continue to witness a steady inflow of orders for MTS from the U.S. Navy and its foreign allies. This, in turn, should bolster its revenues.

Factors in Favor of Raytheon Technologies

Developed and developing economies across the globe have been increasing their defense spending consistently in a bid to strengthen their warfare capabilities. This, in turn, has increased demand for various military arsenals and equipment. Consequently, the quest for an efficient and effective MTS, which could provide long-range surveillance, high altitude, target acquisition, tracking, range finding and laser designation for varied military expeditions, also gained momentum.

Subsequently, this resulted in multiple contract wins for Raytheon Technologies, which enjoys a leading position in manufacturing MTS. The latest contract win is a testament to that.

Per a report from GlobalNewswire, the global Military EO/IR System is anticipated to witness a CAGR of 5.4% through 2026. This represents strong growth prospects for RTX.

Price Movement

In the past year, shares of Raytheon Technologies have rallied 25.7% compared with the industry’s growth of 15.7%.

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Zacks Rank

Raytheon Technologies currently carries a Zacks #4 (Sell). Some better-ranked stocks from the same industry are AAR Corp. AIR, Elbit Systems ESLT and Rada Electronics Industries Limited RADA, each carrying a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AAR Corp. reported second-quarter fiscal 2022 adjusted earnings of 53 cents per share, which surpassed the Zacks Consensus Estimate by 1.9%. Also, AAR Corp.’s earnings recorded a solid surge of 71% from the year-ago quarter.

The Zacks Consensus Estimate for AAR Corp.’s fiscal 2022 earnings indicates a surge of a whopping 103.1% from the prior-year figure. AIR’s shares have rallied 13.6% in the past year.

Rada Electronics came up with an earnings surprise of 47.47% in the last four quarters, on average. The Zacks Consensus Estimate for 2022 earnings has moved up 3.8% in the past 60 days.

Additionally, the Zacks Consensus Estimate for Rada Electronics’ 2021 sales implies growth of 59.9% from the prior-year figure. RADA’s shares have rallied 0.4% in the past year.

Elbit Systems delivered an earnings surprise of 25.95% in the last reported quarter. Elbit Systems came up with a four-quarter average earnings surprise of 25.86%.

Also, the Zacks Consensus Estimate for ESLT’s 2021 sales suggests growth of 12% from the prior-year figure. Its shares have returned 34% to its investors in the past year.


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