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RTX Corporation’s RTX unit, Raytheon, recently secured a $2.13 billion modification contract involving the Standard Missile-3 (SM-3) Block missile. The majority of the work related to this contract will be performed in Tucson, AZ, and Huntsville, AL.
Details of RTX’s Deal
Per the terms of this deal, RTX will offer management, materials and services associated with the sustaining engineering and product support services of the SM-3 missile variants for the U.S. and Foreign Military Sales partners. This contract is projected to be completed by Oct. 29, 2029.
The award has been provided by the Missile Defense Agency, Huntsville, AL. This contract is an amendment to a previous agreement, raising the total contract value from $1.20 billion to $3.33 billion.
What’s Favoring RTX Stock?
With countries worldwide enhancing their defense capabilities, spending on advanced military arms and ammunition, including missiles and missile systems, has been rapidly increasing. RTX, as a prominent manufacturer of missile systems, has thus been benefiting from this trend in the form of a steady flow of orders from the Pentagon and other U.S. allies. The recent contract is an example of that.
Notably, RTX’s SM-3 interceptor is a powerful defensive weapon used by the U.S. Navy to target and destroy short to intermediate-range ballistic missiles. Its “kill vehicle” strikes incoming threats with the force of a 10-ton truck moving at 600 miles per hour. Its advanced design combines reliable technology to provide strong and cost-effective defense for the U.S. Navy and its allies.
The program has more than 30 successful space intercepts. Such strong capabilities and performance must have enabled the company to deliver more than 400 SM-3 interceptors to the U.S. and Japanese navies, which reflects the solid demand it enjoys in the missile market.
RTX’s Growth Prospects
Rising military conflicts, terrorism and border disputes have led nations to increase their focus on national security, particularly on missile defense systems in recent times, backed by the rapid development of advanced missile technologies over the last decade.
This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 5% for the global missiles and missile defense system market during the 2025-2030 period.
Such massive growth projections offer a strategic advantage to RTX, which has a handful of combat-proven missiles in its product portfolio, like the TOW missile, Guidance Enhanced Missile, Advanced Medium Range Air-to-Air Missile, Tomahawk, Standard Missile 2 and a few more, in addition to the SM-3.