Raytheon Company (RTN) has tested a new 5-pound warhead for its Small Tactical Munition (STM), which is specifically designed to be used by the unmanned aircraft systems (UAS).
The new warhead is manufactured by NammoTalley and is lighter than the current warhead. However, in comparison to the older designed warhead, the new warhead has significantly improved blast-fragment capability that helps Raytheon to reduce the size and weight of STM extensively. Incidentally, Nammo Talley Inc. is a privately run aerospace and defense company that designs, develops and produces propellant-based products in the United States.
The STM is a 13-pound guided munition that is approximately 2 feet long. The low weight and small size of STM enables UAS to fly farther, faster and carry more weapons. It also enables weaponization of smaller UAS, such as the Shadow 200, that currently cannot be weaponized because of payload limitations.
The smallest air-launched weapon in Raytheon’s portfolio, STM is built specifically for UAS. Not unlike other weapons in the company’s kitty, STM is easy to use since it is designed with rapid integration in mind and is engineered for improved operator system interface.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements. Future growth will be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD.
However, lingering concerns over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations are potential headwinds. The company presently retains a short-term Zacks# 2 Rank (Buy). We recommend a long-term Neutral rating on the stock.
Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S., with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.The company mainly competes with The Boeing Company (BA) and Northrop Grumman Corpration (NOC).
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