RTX lands missile contract worth up to $24.4bn

The US Defense Department awarded a $24.4bn contract to RTX's Raytheon unit for accelerated production of SM-6 missiles over five years, with two optional years, to replenish stockpiles depleted in the Iran conflict. The Pentagon aims to ensure a steady supply of these interceptors, which serve multiple defense roles. RTX has invested in workforce and production capacity, but funding appropriation by Congress remains uncertain. The deal follows similar large contracts for other munitions.

RTX Corporation's Raytheon unit secured a $511.5M contract for AN/SPY-6(V) radar production and spares, awarded by the Naval Sea Systems Command. Work will be conducted across multiple U.S. locations, with completion expected by November 2031. The AN/SPY-6(V) family provides advanced air and missile defense capabilities, with growing demand across U.S. Navy ships.

The US Army selected Anduril, Castelion, Lockheed Martin, Mach Industries, and RTX to develop 1,000-km range PrSM Increment 4 prototypes for HIMARS. L3Harris partners with Lockheed on ramjet propulsion. Final down-select is set for fiscal 2028. The $1.21B Increment 2 contract was awarded to Lockheed in September. The weapon targets moving maritime and land targets, with Indo-Pacific focus.

The Pentagon's continued spending supports four defense stocks: Lockheed Martin (LMT), General Dynamics (GD), RTX, and Northrop Grumman (NOC). LMT reported $20.06B Q2 revenue (+10.5% YoY) and $7.94 EPS, with a $3.45 quarterly dividend. GD saw $14.1B Q2 revenue (+8.1%) and $4.24 EPS, with a $1.59 quarterly dividend. RTX had $289B backlog, $0.73 quarterly dividend, and raised 2026 free cash flow guidance. NOC reported $20B Q2 awards, $7.68 EPS, and $2.47 quarterly dividend.

RTX Corporation (RTX) shares rose in premarket trading after its Raytheon business secured a $24.4 billion contract for SM-6 interceptors. The five-year deal includes options for two more years and follows recent missile awards totaling $22.9 billion. RTX trades below key moving averages, with earnings expected to grow. Analysts have a Buy consensus rating with a target of $231.86.

The US is deploying a third aircraft carrier strike group to the Middle East, totaling over 20,000 personnel, as tensions with Iran escalate. President Trump hinted at potential strikes post-midterms. Iran may target US bases to hinder operations. The Pentagon signed a $24.4B deal with RTX for SM-6 missiles, part of a $103.7B missile replenishment effort. Recent attacks, including one on a US base in Bahrain, highlight escalating hostilities.