Raytheon Technologies Corp. (NYSE:RTX) stock has been on a roll this year. And that will surely continue with the company’s latest contract with the Pentagon — a $3.2 billion deal with Raytheon Missiles & Defense to manufacture and outfit SPY-6 radar systems.
Raytheon says the contract will outfit seven types of Navy ships with solid state, fixed-face and rotating SPY-6 variants over the next 40 years.
“There is no other radar with the surface maritime capabilities of SPY-6,” said Wes Kremer, president of Raytheon Missiles & Defense. “SPY-6 is the most advanced naval radar in existence, and it will provide our military a giant leap forward in capability for decades to come.”
SPY-6 represents an integrated family of radar systems that provide air and missile defense systems. The company says ships outfitted with SPY-6 radar can defend simultaneously against ballistic and cruise missiles, hostile aircraft and surface ships.
Because the SPY-6 variants share the same hardware and software, the radar is easier to maintain, Raytheon says.
Defense stocks such as Raytheon should continue to grow in the coming year, particularly as Russia’s incursion into Ukraine heightens tensions in Europe.
President Joe Biden’s 2023 budget includes $773 billion for the Defense Department, which is an increase of 2% from 2022. But Jefferies analyst Sheily Kahyaoglu says the budget request is “likely only a baseline” and that major program spending such as shipbuilding is up 17% in the 2023 request.
Raytheon, headquartered in Waltham, Massachusetts, is well-represented in all major defense segments, including its Pratt & Whitney division (military aircraft engines and power systems), Intelligence and Space segment (sensors, training and cyberwarfare), and its aforementioned Missiles & Defense segment.
RTX stock is up 15% so far in 2022. That by far outperforms the Dow Jones Industrial Average, which lost 4.6% since January 1.
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
