The Government of Canada is planning to buy an air strike weapons system from defense contractor RTX Corp. (RTX) for $2.68 billion.
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The U.S. State Department has approved a potential sale of the air strike weapons and related equipment to Canada, according to a formal announcement from the Pentagon. In addition to RTX, Boeing Co. (BA) will serve as a principal contractor for the military equipment sale.
The Pentagon said that the deal represents a significant arms transfer between the United States and Canada, which are joint partners in the North American Aerospace Defense Command (NORAD) military pact, as well as the North Atlantic Treaty Organization (NATO).
Canada Beefs Up Its Military
The purchase of the air strike weapons from RTX Corp. comes as Canada moves to dramatically increase its defense spending. Earlier this year, the Canadian government pledged to meet its commitment to spend 2% of the country’s gross domestic product (GDP) on defense as is required by all NATO members. In 2024, Canada spent only 1.37% of its GDP on defense.
Meeting that 2% target will require that Canada spend an additional $10 billion to $13 billion per year on defense. That additional money has been earmarked for new and improved military equipment such as the RTX air strike weapons. Canada is also in the process of hiring 7,000 more soldiers to meet its full force of 71,500 military personnel.
Is RTX Stock a Buy?
RTX stock has a consensus Moderate Buy rating among 14 Wall Street analysts. That rating is based on 10 Buy and four Hold recommendations issued in the last three months. The average RTX price target of $195.29 implies 14% upside from current levels.
