RTX Secures a $227M Contract to Support AIM-9X Missile Program

RTX Corp. RTX recently clinched a contract involving its AIM-9X and AIM-9X Block II missiles. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $227.4 million, the contract is expected to be completed by May 2029. Per the terms of the deal, RTX will provide depot-level repairs and other related services to support AIM-9X and AIM-9X Block II missile sustainment efforts.

These services include logistics support, sustainment engineering, software support, integration support, failure analysis, configuration management, technical data, diminishing manufacturing sources, material shortages management, training, field support, spare predictions, ordnance assessment, reliability, and management of government property.

Majority of the work related to this deal will be executed in Tucson, AZ.

What's Favoring RTX?

Nations are reinforcing their military capabilities to strengthen their defense structure in the growing threat environment. In this context, increased spending has been witnessed on missile capabilities, resulting in a significant order inflow for companies like RTX, which is a prominent missile maker in the United States with a strong international presence.
Notably, RTX's AIM-9X Sidewinder is the most advanced infrared-tracking, short-range, air-to-air and surface-to-air missile in the world. It is configured for easy installation in a range of modern aircraft, including Boeing's F-15, F/A-18 and E/A-18G and Lockheed's F-22 and F-35 fighters.

The latest variant of AIM-9X Sidewinder, the AIM-9X Block II missile features a redesigned fuse and a digital ignition safety device that enhances ground handling and in-flight safety. Backed by such advanced technology, the company witnesses significant orders for the same, like the latest one. The demand for this product line of RTX can be further gauged from the fact that the AIM-9X SIDEWINDER missile has 31 foreign military sales partners.

Growth Prospects

The global peace index reflects an unstable environment worldwide, with the Russia-Ukraine war continuing for more than two years now, in addition to the ongoing hostility in different parts of the Middle East. This has set the stage for the defense sector to witness rising demand for military products, particularly missiles, as nations worldwide strive to protect their borders from unprecedented attacks.

Therefore, the growth prospect for the missile and missile defense systems market remains solid. To this end, the Mordor Intelligence firm projects the market to witness a CAGR of 5% over the 2024-2029 period.

Such a solid market growth projection stands to benefit RTX, which enjoys an extensive missile portfolio, including SM-6, SM-3 interceptor, TOW missiles and many more such weapons, apart from the AIM-9X missile.

Peer Opportunities

Other defense contractors that are likely to benefit from the growth opportunities offered by the missile and missile defense market are as follows:

Northrop Grumman NOC: Northrop is a prominent developer of missile systems and counter systems, including strategic deterrents, as well as subsystems and components. Its product portfolio includes the Integrated Air and Missile Defense Battle Command System, the Guided Multiple Launch Rocket System propulsion and warhead subsystems, the Hypersonic Attack Cruise Missile, the Advanced Anti-Radiation Guided Missile and a few other combat-proven products that support missile defense systems.

NOC boasts a long-term earnings growth rate of 8.7%. The Zacks Consensus Estimate for Northrop's 2024 sales indicates an improvement of 4.6% from the 2023 reported figure.

Lockheed Martin LMT: Lockheed's Missiles and Fire Control business unit develops, manufactures and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies. Some of its prominent products are the PAC-3 missile and the Terminal High Altitude Area Defense missile.

LMT boasts a long-term earnings growth rate of 4.1%. The Zacks Consensus Estimate for Lockheed's 2024 sales indicates an improvement of 3.2% from the 2023 reported figure.

General Dynamics GD: General Dynamics' Ordnance and Tactical Systems unit is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.
GD boasts a long-term earnings growth rate of 12%. The Zacks Consensus Estimate for General Dynamics' 2024 sales indicates growth of 10.5% from the 2023 reported figure.

Price Movement

In the past year, shares of RTX have risen 13.2% against the industry's decline of 6.6%.

Image Source: Zacks Investment Research

Zacks Rank

RTX currently carries a Zacks Rank #3 (Hold).

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