RTX surges on landmark Pentagon missile production contracts
Five framework agreements will boost output of Tomahawk, AMRAAM and SM-6 missiles by 2-4 times over seven years
Raytheon Technologies shares rose 1.2% in pre-market trading after the defense contractor secured five landmark framework agreements with the Pentagon that will dramatically increase production of critical missile systems over the next seven years.
The agreements, which RTX's Raytheon unit announced on Wednesday, establish production targets that exceed current output by 200% to 400%, with Tomahawk cruise missile production set to surpass 1,000 units annually. AMRAAM air-to-air missiles will exceed 1,900 units per year, while SM-6 interceptors will top 500 units annually.
The accelerated production schedule represents a significant escalation in the United States' missile capabilities and underscores the growing demand for advanced munitions amid heightened global tensions. RTX has already incorporated the capital investments required to support this expansion into its 2026 financial outlook.
According to Street Insider, the contracts formalize long-term production commitments that provide RTX with visibility on demand through the early 2030s, a rarity in the defense sector where funding is often subject to annual congressional appropriations.
The stock's advance comes as RTX recovers from recent political headwinds, with Bloomberg noting the production boost arrives "after taking a Trump beating" — a reference to earlier tariff and policy threats that weighed on defense contractors.
RTX, currently trading at $203.50 with a market capitalization of $269.6 billion, maintains a consensus analyst price target of $213.54, suggesting approximately 5% upside potential. The company's forward price-to-earnings ratio of 29.59 reflects premium valuation multiples typical of leading defense primes with recurring revenue streams.
The production expansion will require significant investment in manufacturing capacity and supply chain development. Defense analysts have previously noted that the industry faces substantial challenges in scaling missile production, given the specialized components and skilled labor required for precision weapons manufacturing.
RTX's Pratt & Whitney and Collins Aerospace divisions provide diversification across commercial aviation and space systems, but the Raytheon missile business remains a critical growth driver. The company reported trailing twelve-month revenue of $88.6 billion, with quarterly revenue growth of 12.1% year-over-year.
Analyst ratings on RTX remain broadly positive, with 13 buy or strong buy recommendations compared to 8 hold ratings and just 1 sell, according to recent consensus data. The stock is up 83% over the past year, though it remains below its 52-week high of $205.36 reached in January.
The Pentagon's push to expand missile production aligns with broader national security priorities as the U.S. seeks to replenish stockpiles depleted by ongoing conflicts and to counter peer adversaries' rapidly advancing missile capabilities. The framework agreements announced Wednesday represent one of the most ambitious peacetime missile production expansion efforts in recent history.