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Raytheon (RTN) Wins $40M Deal for B-2 Antenna Modification


Raytheon Company’s RTN business unit, Space and Airborne Systems (SAS), recently secured a modification contract for providing supplemental service for the B-2 antenna. Moreover, the modification provides for the manufacturing of two additional B-2 antenna tool aids.

The deal, valued at $39.9 million, has been awarded by the Tinker Air Force Base, Oklahoma City, OK. Work related to the contract will be carried out in El Segundo, CA and is scheduled to be over by Sep 7, 2021. With this modification, the total cumulative face value of the contract has shot up to $113.7 million.

B-2 Antenna

Northrop Grumman NOC is the prime contractor for the US Air Force B-2 ‘Spirit’ stealth bomber, which is a low-observable, strategic, long-range, heavy bomber capable of penetrating sophisticated and dense air-defence shields.

Raytheon’s SAS is the primary subcontractor on the B-2 Radar Modernization Program (RMP). Its Active Electronically Scanned Array (AESA) antenna is integrated in the B2 bomber to improve the radar’s performance and operational stealthiness.

Our View

Thanks to its wide range of combat-proven defense products, Raytheon continues to receive scrumptious orders from both Pentagon as well as its foreign clients. This has allowed the company to generate solid sales growth of 8% in the fourth quarter.

Meanwhile, its SAS business unit manufactures combat-proven radars and other sensors for aircraft, spacecraft and ships. The unit’s fourth-quarter sales accounted for 24.6% of the company’s total sales. No doubt, the recently won contract will add further impetus to this unit’s growth.

Per a report by Markets and Markets research firm, the radar sensor market is expected to reach $20.64 billion by 2023 at a CAGR of 19.51% between 2017 and 2023. Inevitably, major radar manufacturers like Raytheon can hugely benefit from an anticipated steady growth projected over the years.

Price Movement

Raytheon’s stock has returned about 38.4% in the last 12 months compared with the broader industry’s gain of 34.1%. The outperformance was primarily led by the company’s strong international sales and a robust balance sheet.

Zacks Rank & Key Picks

Raytheon carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the same sector are Boeing Co. BA and Spirit Aerosystems SPR, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing recorded an average positive earnings surprise of 20.69% in the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has risen 27% to $14.05 in the last 90 days.

Spirit Aerosystems has an average positive earnings surprise of 9.76% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings rose 14.96% to $6.30 in the last 90 days.

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