Kratos Secures a Contract for BQM-167A Target Aircraft Systems
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Kratos Defense & Security Solutions, Inc. KTOS recently secured a $79.8 million contract for the procurement of 60 aircraft, mission kits, certain flight consumables and other technical data for BQM-167A Air Force subscale aerial target systems.
The latest contract incorporates the most significant enhancements to the BQM-167A to date, including gas, aero, payload and power upgrades. These upgrades are designed to replicate more advanced threats, thereby allowing the U.S. Air Force to enhance its weapons systems’ verification and training efforts.
More on KTOS’ BQM-167A Target System
The BQM-167A system is important for the U.S. military training because it acts as a realistic target, allowing the test of its weapons and defense systems. The system has been used for more than 20 years and it is continuously evolving to meet the stringent demands of more advanced enemy technologies.
The recent upgrades to the BQM-167A will allow it to imitate even more complex threats. This in turn will help the U.S. military to stay ahead of potential enemies by training with the latest technology. By improving the way it simulates enemy attacks, the BQM-167A enables the U.S. military to better protect the country.
KTOS’ Growth Prospects in Military Training
The worldwide training market is seeing strong growth, driven by the need to prepare for more advanced and complex threats. With rising global tensions, the military is actively focusing on training with cutting-edge and advanced technology to stay ready for any situation.
This must have led Morder Intelligence to predict that the global military simulation and training market will witness a CAGR of 5.2% during the 2024-2029 period.
KTOS is in a strong position to benefit from the aforementioned market expansion with its BQM product line, including the BQM-167A and BQM-177A, which is crucial for training the Air Force and Navy.
Notably, KTOS has an advantage as the only supplier of the BQM-177A to the U.S. Navy. Recent contract wins, like the $58 million deal in March 2024 for 70 surface-launched aerial targets, show the growing demand for its products in the training market.
Opportunities for KTOS’ Peers
Other defense companies that are likely to enjoy the perks of the expanding military training and simulation market have been discussed below.
Northrop Grumman Corporation’s NOC Combat Electromagnetic Environment Simulator (CEESIM) simulates true-to-war conditions, offering the most cost-effective means of testing and validating the effectiveness of sophisticated electronic warfare equipment.
Northrop Grumman has a long-term (three to five years) earnings growth rate of 8.7%. The Zacks Consensus Estimate for NOC’s 2024 sales indicates year-over-year growth of 5.4%.
Lockheed Martin Corporation’s LMT Close Combat Tactical Trainer integrates all facets of combat vehicle operations to immerse warfighters in simulated battlefield scenarios. Soldiers move, shoot and communicate on this battlefield by operating combat vehicles and employing simulated weapon systems.
Lockheed Martin has a long-term earnings growth rate of 4.7%. The consensus estimate for LMT’s 2024 sales indicates year-over-year growth of 5.3%.
RTX Corporation’s RTX High-Fidelity Simulation system provides realistic training scenarios for both military and civilian personnel, focusing on enhanced decision-making and tactical readiness. The system replicates real-world operational environments with advanced threat emulation, allowing users to train in complex, high-pressure situations.
RTX has a long-term earnings growth rate of 10.4%. The consensus estimate for RTX’s 2024 sales indicates year-over-year growth of 7%.
