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Raytheon (RTX) Wins Deal to Support ESSM Block 2 Production

Zacks Equity Research
·3-min read

Raytheon Technologies Corp.’sRTX Missiles and Defense unit clinched a modification contract to provide support services for the Evolved Seasparrow Missile (“ESSM”) Block 2 production. The Naval Sea Systems Command, Washington, DC, awarded the deal.

Details of the Deal

Valued at $36 million, the contract includes support services for test and evaluation equipment for ESSM. Work related to the deal will be carried out in multiple locations across the United States and is scheduled to be completed by March 2025.

What’s Favoring Raytheon?

Nations across the globe are strengthening their defense capabilities amid the rising geopolitical tensions. In this context, arms and ammunition, which boast the features of next-generation technology-based warfare capabilities, have been gaining momentum. This has been boosting the demand for military missiles, as they form an integral part of military missions.

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This acts as a catalyst for RTX’s growth trajectory as the company enjoys a lucrative position in manufacturing next-generation missiles, ESSM being one of them.

The ESSM is an international cooperative upgrade of the RIM-7 Seasparrow Missile. It boasts capabilities of self-defense battlespace and firepower against high-speed, highly maneuverable anti-ship missiles in the naval environment. Backed by its technologically advanced features, ESSM is bringing transformational anti-ship missile defense capabilities to the United States, NATO and other allies.

Due to its remarkable features in carrying out military missions, RTX’s ESSM continues to witness a steady inflow of orders. The latest contract win is a testament to the same. This shall boost RTX’s revenues from the Missiles and Defense business unit.

Growth Outlook

Per a report from Markets and Markets, the global rockets and missiles market is anticipated to witness a CAGR of 4.8% between 2021 and 2026. This entails a huge growth opportunity for Raytheon Technologies, as the company has an impressive product portfolio of missiles like the National Advanced Surface-to-Air Missile System, Iron Dome System and SkyHunter Missile, and David's Sling System and SkyCeptor Missile.

Such a diverse range tends to provide a competitive edge for the company in the military missile market.Other defense majors who have carved out a position in the military missiles market to enjoy the perks of the expanding market are as follows:

Northrop Grumman NOC designs and produces missile products, including advanced high-speed propulsion systems, fuzes, warheads, and controls for air, sea and land-based systems.

Northrop Grumman delivered the first-ever Insensitive Munition-compliant rocket motor for the Guided Multiple-Launch Rocket System and the high-performance, minimum-smoke HELLFIRE missile rocket motor.

Lockheed Martin’s LMT Missiles and Fire Control develops, manufactures and supports advanced combat, missile, rocket, manned and unmanned systems for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA and dozens of foreign allies.

Some of LMT’s missiles are PAC-3, Javelin Weapon System, Army Tactical Missile System, Precision Strike Missile and Guided Multiple Launch Rocket System family of munitions.

General Dynamics’ GD Ordnance and Tactical Systems munitions portfolio covers the full breadth of naval, air and ground forces applications across all calibers and weapon platforms for the U.S. government and its non-U.S. partners.

GD enjoys a market-leading position in the supply of Hydra-70 rockets and missile sub-systems in support of U.S. tactical and strategic missiles, provisioning both legacy and next-generation missiles with critical aerostructures, control actuators, high-performance warheads and cutting-edge hypersonic rocket cases.


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