Raytheon Acquires Pikewerks - Analyst Blog

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Raytheon Company ( RTN ) has acquired Pikewerks Corporation, a privately held company, for an undisclosed amount. The acquisition will extend Raytheon's cybersecurity capabilities to cater to its customer base of intelligence community, Department of Defense and commercial organizations. The transaction will not materially impact Raytheon's total company sales or earnings per share for the fourth quarter of 2011 or fiscal year 2012.

Pikewerks is based in Madison, Alabama, with offices in Virginia, Seattle and San Antonio. The company enhances Raytheon's comprehensive cybersecurity offerings, including a range of analysis and investigation capabilities with particular emphasis on insider threat protection, software protection and forensics. Two high-demand Pikewerks products are Electronic Armor, an anti-exploitation software tool that protects executable files; and Second Look, a software capability for live, in-memory forensic analysis of operating systems. Pikewerks' employee base is one of the industry's largest repositories of kernel-level engineering talent on the Linux Operating System.

Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements. Future growth will be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD.

The positives are, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. The company competes with The Boeing Company ( BA ) and Northrop Grumman Corporation ( NOC ), both of which presently retain Zacks # 3 Ranks (short-term Hold).

In October this year, Raytheon Company reported third-quarter 2011 adjusted earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.33. Revenue reported by Raytheon in the quarter under review was $6.13 billion, down 2% from $6.27 billion in the year-ago period and also short of the Zacks Consensus Estimate of $6.39 billion.

Based in Waltham, Massachusetts, Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing, effects, and command, control, communications and intelligence systems, as well as a broad range of mission support services.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BA , NOC , RTN

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