Raytheon Technologies Corp.’s (RTX – Free Report) business unit, Pratt and Whitney, recently clinched a modification contract to support the F-135 propulsion system. The Naval Air Systems Command, Patuxent River, MD, awarded the deal.
Details of the Deal
Valued at $736.6 million, the contract is expected to be completed in December 2024. Through the latest modification, Pratt and Whitney will procure propulsion system spare parts, modules, support equipment/packaging handling shipping and transportation material, along with depot lay-in material to support the F-135 propulsion system requirements.
The majority of the work related to this deal will be executed in East Hartford, CT.
Growing Jet Demand to Aid Raytheon
Rising security threats from terrorist activities and adverse geopolitical situations have resulted in increased demand for defense products, of which combat aircraft constitutes a major portion. With its advanced stealth capabilities, aircraft speed and agility, the F-35 jet dominates the combat aircraft market.
Notably, Pratt & Whitney’s F135 propulsion system powers all three variants of F-35, the combat-proven fighter jet fighter developed by defense major, Lockheed Martin (LMT – Free Report) , with BAE Systems (BAESY – Free Report) and Northrop Grumman (NOC – Free Report) being the co-manufacturers. Interestingly, the production of F-35 jets is expected to continue for many years, given the U.S. government’s current inventory target of 2,456 aircraft for the Air Force, Marine Corps, and Navy.
Consequently, demand for F-135 propulsion systems is expected to remain consistent in the coming years.
In fact, an inflow of contracts like the latest one is expected to further boost the top-line performance of the Pratt and Whitney segment, which registered solid 19% year-over-year growth in its adjusted sales in the second quarter of 2021.
Per an analysis by the Research and Markets firm, the global next-gen aircraft propulsion system market is projected to witness a CAGR of 16.34% during the 2025-2035 period. In particular, the United States is expected to dominate this market with an estimated share of 50.8% in 2035.
With Raytheon being a notable aircraft propulsion manufacturer in the United States, surely the aforementioned growth projections would benefit its operating results in the coming days.
Price Performance & Zacks Rank
Raytheon Technologies’ stock has gained 41.1% in the past year compared with the industry‘s rally of 33%.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.