RTX wins contract to help Silent Knight radar systems

RTX Corp. (NYSE: RTX) was recently awarded a contract for its Silent Knight radar systems. The award was presented by United States Special Operations Command, MacDill Air Force, FL.

Transaction details

Valued at $33.7 million, the contract has a cap amount of $293 million and is expected to be completed by June 14, 2030. Under the terms of the agreement, RTX will provide sustainment power, support, research, development and additional objectives related to Silent. Knight Radar Systems.

In providing these assists, RTX will support the U.S. Special Operations Command Program Executive Office, Fixed Wing, Special Operations Forces-KF acquisition, technology and logistics. Work related to this agreement will be performed in McKinney, Texas.

RTX and radars

With the rapid escalation of geopolitical tensions globally in recent times, countries around the world have significantly strengthened their defense arsenal. With radars being a critical part of this arsenal, increased defense spending has also spurred investment in radars.

To this end, it is imperative to mention that while radars have been used since World War II to locate threats and targets, today they are used for multiple purposes such as ground surveillance, missile control, fire control, indication of moving targets, weapon location. and vehicle search.

This must have paved the way for solid order flow for radar manufacturing companies like RTX in the form of contract wins like the last one. Notably, RTX’s Silent Knight radar serves as a common multi-mode terrain tracking and avoidance radar for various platforms, including the MH-47G helicopter, the program’s lead aircraft. It allows airborne forces to fly safely at low altitudes as well as safely enter and exit adverse environments. The system also provides navigation aid, ground mapping and weather information to crews.

RTX Growth Outlook

The demand for military radar systems has multiplied in recent times, driven by factors such as increasing defense spending by emerging economies, increasing regional tensions and conflicts between countries which have increased related threats. to missiles and planes.

This has paved the way for numerous growth opportunities for the military radar market and must have prompted the Markets and Markets company to forecast a CAGR of 4.7% during the period 2023-2027 for the global military radar market. . Such growth projections bode well for major radar manufacturers like RTX.

Impressively, RTX’s product portfolio includes varied radars such as integrated air and missile defense radars, ballistic missile radars, surveillance radars as well as air dominance radars. Radars like AN-TPY-2, APG-79 and APG-82 are some of the company’s combat-proven products that enjoy high demand in the global military radar market, apart from the AN/ SPY-6.

Peer Opportunities

Besides RTX, other defense contractors who are major radar manufacturers and therefore expected to benefit from the growth opportunities offered by the global military radar market are presented below:
Lockheed Martin (NYSE: LMT): Its radars are the choice of more than 45 countries on six continents. The Company’s product portfolio includes various radar systems such as AN/APY-9 Radar, Airborne Ground Surveillance Radar Systems, AN/TPQ-53 Radar Systems, SPY-7, Long Range Discrimination Radar , the FPS-117 and a few others.

Lockheed has a long-term earnings growth rate of 4.10%. The Zacks Consensus Estimate for its 2024 earnings implies an improvement of 3.2% from the reported 2023 figure.

L3Harris Technologies (NYSE: LHX): The company manufactures combat-proven radars like SPS-48, Ground Surveillance Radar, AN/APY-11 Multi-Mode Radar, Tactical Air Surveillance Radar, AN Long Range 3D Surveillance Radar /SPS-48G and many others. . Notably, its Vigilant family of software-defined radar electronic support measurement solutions is critical to survival and dominance in the electromagnetic threat environment of the modern battlefield.

L3Harris has a long-term earnings growth rate of 9.2%. The Zacks Consensus Estimate for its 2024 earnings implies a 9.4% improvement from the 2023 reported figure.
Northrop Grumman (NYSE: NOC): As the pioneer of active electronically scanned array (AESA) radars, NOC has been at the forefront of AESA innovations for more than 60 years. Its diverse product portfolio includes a handful of other radars like the F-35 Fire Control Radar and Distributed Aperture System, LONGBOW Fire Control Radar, Scalable Agile Beam Radar, APR-39 DV(2), EV(2) Radar Warning Receiver Programs and some others.

Northrop has a long-term earnings growth rate of 8.7%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 4.6% from the reported 2023 figure.

Price performance

The company’s shares have risen 11.4% over the past year, compared with the industry’s decline of 10.1%.

Image Source: Zacks Investment Research

Zacks Rank

RTX currently carries a Zacks Rank #3 (Hold).

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