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Raytheon Wins Navy Deal to Support MK-31 Missile Program

Raytheon Technologies Corporation’s RTX Missiles and Defense business unit recently secured a $60.5-MILLION modification contract to provide engineering services for the Rolling Airframe Missile (RAM) MK-31 Guided Missile Weapon System Improvement program. The contract was awarded by the Naval Sea Systems Command, Washington, DC.

Per the agreement, the company will provide support for the maintenance of current weapon system capability. Additionally, the unit will resolve issues through design, systems, software maintenance, reliability, quality assurance and logistics engineering services. Majority of the work related to the deal will be executed in Tucson, AZ, which is scheduled to get completed by December 2021.

How Will the Deal Favor Raytheon?

Increasing geopolitical tensions across the globe prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, missile defense has steadily emerged to play a pivotal role in a nation’s defense strategy. With the United States being the world’s largest weapons supplier, it is a golden era for premier defense contractors like Raytheon.

Notably, its MK-31 weapon system is the most modern self-defense weapon system, deployed from ships, to destroy anti-ship missiles and has the capability to protect ships of all sizes. With these advanced weaponries in its portfolio, Raytheon enjoys a solid demand pull from the defense space. The latest contract win is an instance of that. This, in turn, is expected to boost the company’s top-line performance in coming quarters.

Further, the U.S. government’s fiscal 2021 defense budget includes a significant spending plan of $20.3 billion on missile defense, 49.3% higher than the previous budget plan. Evidently, such an increased spending provision should usher in more contracts for Raytheon Technologies’ major missile programs.

Looking Ahead

Per a report by Fortune Business Insights, the global rocket and missile market is projected to grow from $52.5 billion in 2019 to $71.8 billion by 2027, at a CAGR of 4.52%. Such massive growth projections reflect increased growth 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 (THAAD) air and missile defense programs. It also manufactures the Multiple Launch Rocket System (MLRS), Joint Air-to-Surface Standoff Missile (JASSM) and Javelin tactical missile programs, alongside other tactical missiles.

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.

Similarly, Northrop Grumman’s missile defense program includes AGM-88E advanced anti-radiation guided missiles (AARGM), Ground Based Strategic Deterrent (GBSD) weapon system and rocket propulsion systems. Earlier this month, the U.S. Air Force awarded Northrop Grumman a $13.3-BILLION contract to replace its aging stock of intercontinental ballistic missiles.

Zacks Rank & Price Performance

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.

In the month-to-date period, Raytheon Technologies’ shares have gained 2.2% compared with the industry’s 1.4% growth.

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Northrop Grumman Corporation (NOC): Free Stock Analysis Report
 
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