Raytheon wins the Air Force's nuclear-tipped missile contract (but Lockheed's still laughing)
Big Defense Energy... Raytheon's feeling it. It's the world's largest missile-builder and one of the biggest US defense contractors, along with military-vehicle-producing, big-weapon-pumping companies like Lockheed Martin, Boeing, and Northrop Grumman. The US Air Force just tapped Raytheon to build its new nuclear-tipped cruise missile.
- Raytheon's military biz is doing pretty well — it's the only prime contractor on this missile project, so it doesn't have to share much weapon-making $$$ with its peers. Lockheed snagged a "supporting role," but Raytheon gets the nuclear defense Oscar.
- But Raytheon's commercial biz is struggling — All those civilian flights that need Raytheon-made interiors aren't flying. That's an LDE ("low defense energy") feeling for Raytheon — the stock is down 60% since February, despite the Air Force deal.
A big defense ego... Lockheed Martin's rocking it. While everyone is withdrawing their yearly economic forecasts, Lockheed went ahead and confirmed its revenue goals for 2020. Bold, confident move in these corona-times — but Lockheed can swing it:
- The US gov is Lockheed's biggest client, accounting for around 70% of its revenue.
- Unlike Raytheon, which has some commercial divisions, Lockheed almost exclusively sells to governments, whose purchasing hasn't stopped like many businesses have. That's why its stock is down only 12% since February.
- It even hired 1.7K people in the past month and is looking to hire 5K more.
Less commercially exposed = less pain exposed... At least for Defense companies in the corona-conomy. Raytheon lies somewhere in the middle between highly-commercial Boeing (which is destroyed by the travel lockdowns) and extra military-focused Lockheed (which is cruising). While missile tech is Raytheon's bread-and-butter, it also makes electronic systems for commercial aircraft. And right now, its commercial biz is hurting.