⚠ New Entrants With Different Business ModelsModerate threat
RTX (RTX) — threat to the moat
RTX warns in its own filing that new defence entrants with different business models are competing, especially in cheaper, more numerous weapons.
The defence market is not closed to newcomers. RTX's risk factors note a "continued increase in commercial competitors, new entrants with different technology approaches and business models"1. The Department of War's growing use of other transaction agreements, also flagged in the filing2, makes it easier for such firms to win work without the traditional procurement process.
The threat is sharpest where products are cheaper and more numerous, such as drones and counter-drone systems. That is why Raytheon's doubling of Coyote output3 matters: it is defending the category most exposed to newcomers.
Raytheon's advantages remain qualification, integration and capacity for complex systems such as Patriot and Standard Missile. A newcomer can build a drone quickly; it cannot quickly build an interceptor that meets a navy's certification.
Raytheon has been growing in the category too. Counter-unmanned aircraft system programmes were among the drivers of its 2024 organic growth4. The newcomers are competing for a market Raytheon is already in, and the question is whether its share of that market grows as fast as the market itself.
Watch the share of Raytheon's bookings in new categories. If counter-drone and low-cost munitions awards go mostly to newer firms while Raytheon's traditional programmes keep growing, the moat will hold in the old market and be absent from the new one.
- ReportedRTX's risk factors note a "continued increase in commercial competitors, new entrants with different technology approaches and business models".RTX Form 10-K for fiscal 2025 - Item 1A risk factors: competition on price, delivery and technology; customers buying parts from suppliers other than the original equipment manufacturer; discounts and guarantees to win engine positions; new defence entrants; GTF durability; reputational harm; pension sensitivity to the discount rate; tariffs. — FY2025 · publ. 6 February 2026 · source ↗
- ReportedThe Department of War's growing use of other transaction agreements, also flagged in the filing, makes it easier for such firms to win work without the traditional procurement process.RTX Form 10-K for fiscal 2025 - Item 1A risk factors: competition on price, delivery and technology; customers buying parts from suppliers other than the original equipment manufacturer; discounts and guarantees to win engine positions; new defence entrants; GTF durability; reputational harm; pension sensitivity to the discount rate; tariffs. — FY2025 · publ. 6 February 2026 · source ↗
- ReportedThat is why Raytheon's doubling of Coyote output matters: it is defending the category most exposed to newcomers.RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - defence: Raytheon bookings, book-to-bill and backlog, munitions output, framework agreements and the budget request. — Q2 2026 · publ. 24 July 2026 · source ↗
- ReportedCounter-unmanned aircraft system programmes were among the drivers of its 2024 organic growth.RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - totals across segments: segment sales and profit, eliminations, acquisition accounting and FAS/CAS adjustments. — FY2023-FY2025 · publ. 6 February 2026 · source ↗