Raytheon (RTX) Secures $215-Million Deal for WAAS From FAA

Raytheon Technologies Corp.’s RTX business segment, Raytheon Intelligence & Space (RI&S), recently won a contract to provide technical refresh and Dual Frequency Operation (DFO) upgrades to the FAA's Wide-Area Augmentation System (WAAS). The Federal Aviation Administration (FAA) has offered the award.

Valued at $215 million, this contract has a ceiling value of $375 million. Per the terms of the WAAS DFO-2 contract, RI&S will deliver more modern, and therefore sustainable, processing, system security, and network architecture, as well as dual frequency service.

Importance of WAAS

WAAS is a space-based accurate navigation system, which enables safer air travel in support of the National Airspace System. It monitors and evaluates all GPS signals over North America to enable pilots to fly using augmented GPS data for the safety of life missions like precision landing and en route navigation. The system allows pilots to safely land in places that were previously inaccessible because of the airport location and/or weather.

With the addition of dual frequency service, anticipated by 2028, WAAS users with dual frequency WAAS-equipped receivers will find that the service supports better positioning determination even during solar storm periods.

Growth Prospects

Navigation systems are used in varied industries like mining, aviation, surveying, agriculture, maritime and military applications. In particular, increased global trade along with maritime as well as aviation traffic has aided the navigation systems market's growth in recent years.

Backed by rapid technological advancements and increasing demand for real-time information, the growth prospects of the global navigation systems market look bright.  The global navigation systems market is expected to witness a CAGR of 10.8% over the 2022-2027 time period.

Such a solid growth prospect for the aforementioned market should benefit companies like Raytheon, which manufactures navigation systems. Other companies that are poised to reap the benefits of the growing navigation systems market are:

Lockheed Martin LMT: It is currently contracted to design and build 10 GPS III satellites to provide significant capability improvements over earlier-designed GPS satellites in orbit. As part of the U.S. Space Force’s effort to modernize today’s Global Positioning System (GPS) satellite constellation with new technology and advanced capabilities, Lockheed Martin is building up to 32 next-generation GPS III/IIIF satellites.

The company boasts a long-term earnings growth rate of 5.4%. LMT’s shares have gained 20.7% in the past year.

BAE Systems Plc BAESY: It develops, manufactures, integrates and supports GPS receivers and guidance systems for advanced military applications. The company’s products include a multifunctional information distribution system, joint tactical radio system, defense advanced GPS receivers, SABR GPS Receiver and AN/ASN-157 Doppler Navigation system.

The company boasts a long-term earnings growth rate of 9.3%. BAESY’s shares have gained 16.5% in the past year.

Safran SAFRY: It manufactures navigation systems like the SkyNaute hybrid inertial/GNSS navigation system, which meets all safety and reliability requirements for airplanes, helicopters and drones. Some of its other navigation systems are Sigma 95, GADIRS, SpaceNaute and APIRS.

The company boasts a long-term earnings growth rate of 43%.

Price Performance

In the past year, Raytheon Technologies’ shares have rallied 2.8% against the industry’s 2.1% fall.

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Zacks Rank

Raytheon Technologies carries a Zacks Rank #4 (Sell) at present.

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