Raytheon (RTX) Wins $184M Air Force Deal for ASARS-2B Sensors
Raytheon Technologies Corp.’s RTX business segment, Raytheon Intelligence & Space (RIS) recently secured a contract for Advanced Synthetic Aperture Radar System (ASARS)-2B sensors. The award has been offered by the Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, OH.
Details of the Deal
Valued at $184 million, the contract is expected to be completed by Aug 16, 2027. Per the deal terms, Raytheon will supply ASARS sensors and supplemental equipment.
Work related to this deal will be carried out in El Segundo, CA.
Significance of ASARS sensors
ASARS provides aircraft with long-range, high-resolution intelligence, surveillance, and reconnaissance capabilities over large areas, The ASARS-2A sensor locates moving as well as stationary targets using ground moving-target indicator along with search and spot modes. Its onboard processing system delivers almost-real time and precise target location data. This allows decision-makers to respond quickly, rather than relying on ground stations to process the targeting data.
What’s Favoring Raytheon?
With rapid escalation of geopolitical tensions in recent times globally, developed as well as developing nations have been boosting their defense arsenal significantly. Radars and sensors constitute a vital part of their defense equipment. While radars have been in use since World War II for locating threats and targets, nowadays, they are being used for multiple purposes like ground surveillance, missile control, fire control, air traffic control, moving target indication, weapons location and vehicle search.
Demand for military radar and sensor systems has expanded manifold in recent times, driven by factors like a rise in defense spending of emerging economies, an increase in regional tensions and inter-country conflicts, which have increased threats from missiles and aircraft. These, in turn, have been benefiting radar and sensor manufacturing companies like Raytheon in the form of contract wins like the latest one.
Raytheon’s product portfolio consists of varied radars and sensors. AN-SPY 6, AN-TPY-2, APG-79, UEWR, AN/MPQ-64 Sentinel are some of its combat-proven products that enjoy solid demand in the global military radar market. The solid demand is reflected by the continuing flow of contracts for Raytheon's radars and the latest contract win is an example of that.
Growth Prospects
Per Fortune Business Insights firm, the global military radar market is expected to reach $22.1 billion by 2028 at a CAGR of 6.3% from 2021. Such growth projections for the aforementioned market should benefit prominent radar manufacturers like Raytheon Technologies, Lockheed Martin LMT, L3Harris Technologies LHX and Northrop Grumman NOC.
Northrop is a pioneer in Active Electronically Scanned Array (AESA) radars and has been at the forefront of AESA innovations for more than 60 years. The company’s broad portfolio of products comprises radars like AN/APG-83 scalable, agile beam radar, AN/ASQ-236 Dragon’s eye radar pod as well as AN/APG-81 and AN/APG-71 for F-35 and F-22 jets, respectively.
Northrop boasts a long-term earnings growth rate of 2.2%. The Zacks Consensus Estimate for 2022 sales indicates an improvement of 1.9% from the 2021 reported figure.
Among Lockheed Martin’s notable radar portfolio, the significant ones include SPY-7, AN/TPQ-53 radar system and AN/APY-9 radar.
Lockheed boasts a long-term earnings growth rate of 5.4%. The stock has gained 21.8% in the past year.
Similarly, L3Harris is the manufacturing company for AN/SPS-48G naval radar, Symphony Airfield Radar Systems and Tactical Air Surveillance radars and a few more.
L3Harris boasts a long-term earnings growth rate of 3.3%. The stock has gained 3.4% in the past year.
Price Performance
In the past year, Raytheon Technologies’ shares have rallied 5% compared with the industry’s 1.9% rise.
Image Source: Zacks Investment Research
Zacks Rank
Raytheon Technologies carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
L3Harris Technologies Inc (LHX) : Free Stock Analysis Report
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
