In This Article:
RTX Corporation’s RTX unit, Raytheon, recently secured a $31.2 million modification contract for the recertification and modernization of 257 Tomahawk Block IV All-Up-Round Missiles. The award has been provided by Naval Air Systems Command, Patuxent River, MD.
Details of RTX’s Deal
The contract also includes the procurement of 24 Maritime Strike Tomahawk (MST) vertical launch systems and 11 MST missile capsule launch systems. Additionally, it covers non-recurring engineering to support the transition of the MST missile to production. The majority of the work related to this contract will be performed in El Segundo, CA; Tucson, AZ and Pontiac, MI.
The project is expected to be completed by November 2026.
What’s Favoring RTX Stock?
As global defense spending has surged significantly in recent times, with nations rapidly enhancing their military capabilities, investments in missiles and missile defense systems are pouring in. RTX, being a leading missile system manufacturer, benefits from consistent orders for its combat-proven missiles from the Pentagon and U.S. allies. The recent contract is an example of that.
Notably, RTX’s Tomahawk missile stands out for its ability to strike targets 1,000 miles away, even in fortified areas. In particular, the Block IV Tactical Tomahawk offers advanced features like mid-flight target changes, extended flight duration and instant path adjustments. This missile has been tested more than 550 times and deployed in more than 2,350 missions, which reflects the solid demand it enjoys in the missile market. Its solid demand is further reflected by the fact that in 2024, the U.S. and U.K. Navies employed Tomahawks to target Houthi rebel sites in Yemen.
RTX’s Growth Prospects
Rising military conflicts, terrorism and border disputes have led nations to increase their focus on national security, particularly on missile defense systems in recent times, backed by the rapid development of advanced missile technologies over the last decade.
This is likely to have prompted the Mordor Intelligence to forecast a compound annual growth rate of 5% for the global missiles and missile defense systems market during the 2024-2029 time period.
Such strong growth projections indicate solid opportunities for RTX, which has a handful of combat-proven missiles in its product portfolio, like the TOW missile, Guidance Enhanced Missile, Advanced Medium Range Air-to-Air Missile, ESSM, Standard Missile 2 and a few more, in addition to the Tomahawk.
Opportunities for Other Defense Stocks
Other defense companies that are likely to enjoy the perks of the expanding missiles and missile system market have been discussed below.
Northrop Grumman Corporation NOC: Northrop Grumman provides high-speed, long-range strike weapons like the AARGM-ER, which is a supersonic, air-launched tactical missile system. It also develops and builds advanced missile defense technology, ranging from command systems to directed energy weapons, advanced munitions and powerful sensors.
The company’s long-term (three to five years) earnings growth rate is 19.1%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates year-over-year growth of 5.3%.
The Boeing Company BA: It manufactures various missile defense systems, including the Ground-based Midcourse Defense, Aegis Ballistic Missile Defense and Avenger. Boeing-built air and missile defense systems have been protecting its customers for nearly 25 years against threats ranging from intercontinental ballistic missiles to hostile aircraft.
The company has a long-term earnings growth rate of 19.3%. The Zacks Consensus Estimate for BA’s 2025 sales indicates year-over-year growth of 22.5%.
Lockheed Martin Corporation LMT: Lockheed Martin’s renowned missile program includes the Patriot Advanced Capability-3 and Terminal High-Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, the Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.
The company has a long-term earnings growth rate of 4.5%. The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.5%.