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RTX missile contracts remain in focus after Raytheon secured a $24.4 billion SM-6 deal, extending a recent run of major awards.
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Shares of RTX Corporation and other major defense contractors fell by more than 2% in premarket trading following the news that Democrats secured majorities in both chambers of Congress.
Raytheon, an RTX business, has secured a phase one contract from DARPA to develop all-optical processing technology for the PICASSO program.
Despite concerns about a Democratic sweep in the midterms potentially hurting defense stocks, historical data shows defense equities often recover within six months post-election. The article recommends GE Aerospace and RTX as top picks due to their significant commercial aerospace exposure, which provides a buffer against potential cuts to specific military programs. Large defense contractor backlogs tied to readiness, rearmament, and replenishment efforts remain bipartisan priorities.
Defense contractors Lockheed Martin, RTX, and Boeing are poised for growth as the Department of Defense shifts toward more favorable contract terms. Recent long-term agreements with Lockheed Martin featuring inflation adjustments, cash flow provisions, and recovery mechanisms signal an improved relationship between the government and defense companies, potentially derisk the sector and drive valuation gains.
Collins Aerospace, a business segment of RTX, is expanding its partnership with Lufthansa Systems to enhance navigation data services.
RTX Corporation won an $8 billion sole-source contract from the U.S. Air Force to upgrade Strategic Communications Terminals for America's nuclear forces. The contract spans 10 years with completion in October 2036. While significant, the deal represents less than 1% of RTX's annual revenue and adds approximately $90 million in annual operating profit, making it unlikely to meaningfully impact the stock given its current 31x P/E valuation.