Yahoo Finance RTX Secures U.S. Army Contract to Procure TOW 2B Missiles
RTX Corporation RTX clinched a contract to procure Tube-Launched, Optically-Tracked, Wireless-Guided (TOW) 2B Missiles. The award has been offered by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $322.5 million, the contract is expected to be completed by Sep 30, 2026. Work related to the deal will be carried out in Tucson, AZ.
Importance of TOW missile
RTX’s TOW weapon system, with the multi-mission TOW 2B, enables ground forces to overpower adversary armored and wheeled systems, regardless of the environment or conditions. It provides a combat proven capability to the Army’s Optionally Manned Fighting Vehicle development program while maintaining compatibility with the existing launch platforms.
With its extended range performance, the TOW missile is the long-range precision, heavy anti-tank and assault weapon system of choice for the U.S. Army Stryker, Bradley Fighting Vehicle, ITAS High-Mobility Multipurpose Wheeled Vehicle and Light Armored Vehicle-Anti-tank platforms.
The fact that this weapon system is currently deployed with more than 40 international armed forces and integrated on more than 15,000 ground, vehicle and helicopter platforms surely reflects the solid demand that it enjoys in the missile market. The latest contract win by RTX is a bright example of that.
What’s Ahead?
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 RTX being a prominent U.S. missile maker, the increased missile defense adoption by nations provides the company with solid growth opportunities.
Looking ahead, per a report by the Research and Markets firm, the global rocket and missile market is projected to witness a CAGR of 4.5% during the 2022-2030 period to reach $84.2 million by 2030. Such massive growth projections indicate solid opportunities for RTX, which has a handful of combat proven missiles in its product portfolio, like Advanced Medium Range Air-to-Air Missile (AMRAAM), Guidance Enhanced Missile (GEM-T), the National Advanced Surface-to-Air Missile System (NASAMS), Tomahawk, Standard Missile 2 (SM-2) and a few more, in addition to the TOW missile.
Peer Prospects
Considering the solid growth opportunities offered by the global rocket and missile market, other major defense primes like Northrop Grumman NOC, Lockheed Martin LMT and Boeing BA that specialize in developing technologically advanced missiles should also benefit.
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. In August 2022, the company had been chosen by the U.S. Missile Defense Agency to lead the Homeland Missile Defense Program.
NOC boasts a long-term earnings growth rate of 4.1%. The Zacks Consensus Estimate for its 2023 sales implies an improvement of 5.6% from the 2022 reported figure.
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, the Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.
LMT boasts a four-quarter average earnings surprise of 5.04%. The stock has a long-term earnings growth rate of 6.5%.
For almost 25 years, Boeing-built and supported air and missile defense systems have protected the nation, warfighters, allies and international partners against threats ranging from intercontinental ballistic missiles to hostile aircraft. BA’s missile and missile portfolio includes Aegis Ballistic Missile Defense, Avenger, Ground-Based Midcourse Defense and PAC-3 Missile Seeker.
The Zacks Consensus Estimate for Boeing’s 2023 sales indicates an improvement of 19.3% from the 2022 reported figure. The stock has a long-term earnings growth rate of 4%.
Price Performance
In the past year, RTX’s shares have lost 9.8% compared with the industry’s 9.1% decline.
Image Source: Zacks Investment Research
Zacks Rank
RTX 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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