Range Generation Next (“RGNext”), a joint venture (“JV”) of Raytheon Company (RTN) and General Dynamics Corp. (GD), has won a $1.5 billion contract with a one-year base period and nine one-year options from the U.S. Air Force.
Per the contract, Raytheon and General Dynamics will be jointly involved in operating and maintaining launch ranges at Florida’s Space Coast and Vandenberg Air Force Base in California.
The JV will cater to the U.S. Air Force Space Command. It aims to provide a wide range of services such as launch operations, testing of civil, commercial and international spacelift vehicles, logistics support, integration and network defense to name a few. It also supports aeronautical tests and evaluations.
RGNext is primarily focused on providing the U.S. Air Force Space and Missile Systems Center’s Launch and Test Range System (“LTRS”) Integrated Support Contract (“LISC”) with innovative technologies and processes.
LISC is a fixed-price-incentive firm contract that supports the Eastern Range on the Space Coast of Florida, the Western Range at Vandenberg Air Force Base and several other locations. The contract covers all operations and maintenance work for the LTRS.
While Raytheon 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, General Dynamics is engaged in providing mission-critical information systems and technologies, and marine systems.
At the macro level, a gradual change in defense spending patterns has been noticed. Focus has shifted to high-tech intelligence equipments and intelligence, surveillance and reconnaissance technologies in light of the rising geopolitical tensions and terrorism. In order to make the most of the non-platform-centric focus, big defense operators are investing substantially in research and development to develop new products and upgrade existing ones to win more defense deals.
Raytheon has a Zacks Rank #3 (Hold), while General Dynamics sports a Zacks Rank #2 (Buy). Other stocks worth considering in the same sector are The Boeing Company (BA) and Northrop Grumman Corp. (NOC). Both of them carry the same rank as General Dynamics.
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