The U.S. Air Force has picked Raytheon Technologies’ (RTX) missiles and defense unit as the sole contractor to develop its long-range nuclear-armed cruise missile.
Raytheon won the contract to develop the long-range cruise missile over Lockheed Martin (LMT) after “extensive evaluation” during preliminary design reviews, the U.S. Air Force said in a statement. Back in 2017, the U.S. Air Force had awarded both companies with two contracts to develop designs for the project. The so-called long-range stand off weapon (LRSO) is scheduled to replace the air-launched cruise missile.
“This is not a down-select per se; instead, we are reframing our relationship with Lockheed Martin to focus on specific technology maturation we believe either has future applicability for the final LRSO design or will reduce overall program risk,” said Elizabeth Thorn, the LRSO system program manager.
Raytheon’s missiles & defense team recently passed its preliminary design review and is on track to complete the phase of the defense acquisition process by January 2022, according to the statement. Contract negotiations for the engineering and manufacturing development phase will start in fiscal year 2021.
Earlier this month, Raytheon announced the completion of its all-stock merger with United Technologies Corp.
Four-star analyst Noah Poponak at Goldman Sachs last week reinstated the company’s stock with a Buy rating and $76 price target, commenting that the defense end-market is likely to see little near-term impact from the coronavirus pandemic outbreak.
TipRanks data shows that Wall Street analysts have a Moderate Buy rating on Raytheon stock split into 11 Buys and 4 Holds. The $91.33 average price target is more aggressive than Poponak’s and implies 37% upside potential in the coming 12 months. (See Raytheon stock analysis on TipRanks).