Raytheon (RTX) Wins Deal for RAM 2B Guided Missile Procurement

·3 min read

Raytheon Technologies Corp.’s RTX business unit, Missiles and Defense, recently clinched a contract involving the Rolling Airframe Missile (“RAM”) Block 2B Guided Missile. The Naval Sea Systems Command, Washington, D.C. has awarded the deal.

Valued at $43.6 million, this contract involves procurement services for the RAM Block 2B Guided Missile. The work related to this deal will be carried out in Tucson, AZ, and is scheduled to be completed by January 2026.

Importance of the RAM Guided Missile

The 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. Its strong demand can be gauged by the fact that currently 165 ships in 11 countries are equipped with this missile.

The Block 2 variant, the latest evolution in the development of the RAM missile, has a larger rocket motor, an advanced control section and an enhanced RF receiver capable of detecting the quietest of threat emitters.

The improvements make the missile two and a half times more maneuverable, with one and a half times the effective intercept range. This provides the Block 2 variant with the capability to defeat highly-stressing threats, increasing the survivability of the defended ship.

Backed by such remarkable features, Raytheon Technologies continues to witness a strong inflow of orders involving the missile, like the latest one. This shall boost RTX’s revenues from the Missiles and Defense business unit.

Growth Prospects

The Russia-Ukraine warfare has led many nations to increase their defense spending in recent times to strengthen their defense landscape to deter any sudden assault. In this context, missiles, forming an integral part of an efficient defense system, may witness a rise in demand going forward.

Per the reports from Mordor Intelligence, the missiles and missile defense system market is expected to witness a CAGR of 4.8% from 2023 to 2028. Such abounding growth projections stand to benefit Raytheon, which boasts a strong portfolio of efficient missiles.

Apart from RTX, defense majors that may benefit from the expanding missile market size are as follows:

Northrop Grumman NOC is a prominent developer of missile systems and counter systems, including strategic deterrents, subsystems and components. To strengthen its position in the missile market, Northrop had 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.

Northrop has a long-term earnings growth rate of 3.5%. Its investors have gained 1.9% in the past six months.

Lockheed Martin’s LMT Missiles and Fire Control business unit develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers. Some of its product range includes the PAC-3 family of missiles, M270, RRPR, THHAD, etc.

Lockheed Martin’s long-term earnings growth rate is pegged at 6.9%. Shares of LMT have returned 6.7% value to investors in the past year.

General Dynamics’ GD 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 launches tubes for tactical and strategic missiles.

General Dynamics boasts a long-term earnings growth rate of 8.6%. The Zacks Consensus Estimate for GD’s 2023 earnings suggests a growth rate of 4.5% from the prior-year reported figure.

Price Movement

In the past six months, shares of Raytheon Technologies have rallied 15.8% compared with the industry’s growth of 18.2%.

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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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