RTX Corporation’s RTX business segment, Raytheon, recently won a $590.8 million contract to manufacture Next Generation Jammer Mid-Band (NGJ-MB) ship sets. The award has been provided by the Naval Air Systems Command, Patuxent River, MD.
Details of the Deal Secured by RTX
Per the terms of the deal, RTX will develop 13 NGJ-MB ship sets, nine of which will be supplied to the U.S. Navy and the remaining four to the Royal Australian Air Force. The order includes the delivery of associated spares and support equipment and the provision of non-recurring engineering support.
The majority of the work related to this deal will be executed in Forest, MS, and McKinney, TX. The contract is projected to be completed by January 2028.
What’s Favoring RTX?
Rising geopolitical tensions globally have prompted countries to enhance their military capabilities, including electronic warfare (EW) systems, by increasing spending on the production and modernization of varied programs. During the past decade, the utilization of cutting-edge technology in EW systems has rapidly evolved, making them an essential component of any country's defensive architecture.
To this end, the Mordor Intelligence firm predicts the Electronic Warfare market will witness a CAGR of 5.1% during the 2024-2029 period. This should benefit EW system manufacturers like RTX in the form of steady order flows from the Pentagon and other U.S. allies, with its NGJ-MB being a state-of-the-art electronic attack system integrated into E/A-18 Growler fighter aircraft. The latest contract win is another bright example of that.
Opportunities for Other Defense Stocks
Other defense contractors that are expected to reap the benefits of the expanding EW market are listed below:
L3Harris Technologies LHX: It manufactures electronic warfare systems such as the AN/ALQ-214 (IDECM) F/A-18 Countermeasure System, Viper Shield AN/ALQ-254(V)1 All-digital Electronic Warfare Suite, CREW Vehicle Receiver/Jammer and The Next Generation Jammer-Low Band.
L3Harris has a long-term (three to five years) earnings growth rate of 9.2%. The Zacks Consensus Estimate for LHX’s 2024 sales suggests growth of 9.7% from the prior-year reported figure.
Lockheed Martin LMT: It provides global ground EW solutions to U.S. forces and partner nations through a unique next-generation open architecture product platform and open business model. Its Advanced Off-Board Electronic Warfare program delivers persistent electronic surveillance and attack capability against naval threats like anti-ship missiles.
Lockheed boasts a solid long-term earnings growth rate of 4.6%. The consensus estimate for LMT’s 2024 sales indicates a 5.4% improvement from the prior year's reported figure.
Northrop Grumman NOC: The company has been providing Naval Airborne Electronic Warfare solutions for more than 55 years. Some of its EW systems include the ALQ-251 radio frequency countermeasures system and the AN/APR-39 Radar Warning Receiver/Electronic Warfare Management System.
NOC boasts a solid long-term earnings growth rate of 19.1%. The Zacks Consensus Estimate for its 2024 sales indicates year-over-year growth of 5.3%.
RTX Stock Price Movement
In the past six months, shares of RTX have risen 15.1% against the industry’s decline of 0.1%.
Image Source: Zacks Investment Research
RTX’s Zacks Rank
RTX 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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