The Missiles and Defense business subsidiary of Raytheon Technologies Corp. (NYSE:RTX), has signed a contract to support the manufacturing of the AN/SPY-6(V) family of radars. The contract was granted by the Navy Sea Systems Command in Washington, D.C.

This $619.2 million deal entails the delivery of components necessary for the manufacture of the AN/SPY-6(V) family of radars. This deal’s associated work will be carried out across several US locations, and it will be finished by September 2026.

What is in Raytheon Technologies’ Favor?

Due to escalating geopolitical tensions, countries have recently increased their defense spending on military hardware and weapons in order to update and enhance defense systems. Radars, which guarantee effective military surveillance and reconnaissance, frequently play a significant role in military missions in such a situation. Given their significance in military operations, radars are likely to experience increased demand in the days to come.

Given the anticipated rise in demand, Raytheon Technologies’ experience producing cutting-edge radars could provide the company an advantage in securing a lot of contracts. With a wide selection of radars including the APG-79, APG-82, B-52 AESA radars, etc., Raytheon is able to tap into the lucrative radar market.

The ability to produce radars with such efficiency and Raytheon’s ongoing investment strategy to advance the technology underpins the company’s steady stream of contracts, including the most recent one for the manufacture of radars and provision of other associated support. This presents RTX with a promising opportunity for income creation from the radar market, which might increase its entire top line.

Future Possibilities

According to reports from Mordor Intelligence, from 2023 to 2028, the military radar market is anticipated to grow at a CAGR of 4.7%. The growing market size expectation underpins Raytheon’s expansion in the military radar sector. In addition to RTX, the following military giants are continually enhancing radar capabilities to guarantee lucrative returns from the radar market:

For more than 60 years, Northrop Grumman (NYSE:NOC) has been at the forefront of AESA radar advancements. The air-to-air and air-to-ground supremacy and battlespace situational awareness offered by AESA radars are unmatched. AN/ASQ-236 Dragon’s Eye Radar Pod, AN/APG-83 Scalable Agile Beam Radar, F-35 AN/APG-81, etc. are a few of NOC’s well-known radars.

The long-term earnings growth rate for Northrop Grumman is 3.5%. Shares of NOC have risen 3.3% during the past year.

Radar and electro-optical/infrared sensor systems from Lockheed Martin (NYSE:LMT) offer next-generation capabilities for advanced precision targeting, navigation, threat identification, intelligence, surveillance, and reconnaissance. Longbow FCR, AN/APY-9 Radar, Lantirn ER, etc. are among the company’s radar products.

The projected long-term earnings growth rate for Lockheed Martin is 6.9%. Investors have received a 7.5% value return on their LMT shares during the past year.

Programs for ground-based radar and strategic missile defense are supported by Kratos (NASDAQ:KTOS). AN/TPY-2 THAAD, TPQ-53, TPS-77, TPS-78, and SBIRS are among its most important programs.

According to the Consensus Estimate, KTOS’s earnings are expected to increase by 3.2% from the prior year’s reported amount in 2023. Shares of Kratos have gained by 27.3% during the previous six months.

Price Change

Shares of Raytheon Technologies have increased 17.5% over the last six months, outpacing the 19.4% gain of the sector.

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