) was awarded a $636 million development and sustainment contract
to provide the Exoatmospheric Kill Vehicle ("EKV") to
The Boeing Company
). The EKV is part of the Ground-based Midcourse Defense ("GMD")
program, where Boeing is the prime contractor.
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RAYTHEON CO (RTN): Free Stock Analysis Report
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Under conditions of the contract, which extends through November
2018, Raytheon will provide EKV development, fielding, testing,
system engineering, integration, configuration management,
equipment manufacturing and refurbishment, and operation and
EKV represents the centerpiece for the Missile Defense Agency's GMD
as the intercept component of the Ground Based Interceptor, also
known as GBI, which is designed to engage high-speed ballistic
missile warheads in space.
Raytheon is one of the best-positioned companies among the
large-cap defense players due to its non-platform-centric focus, as
well as its strong order bookings and order backlog of more than
$34 billion at the end of the first quarter of 2012.
Revenue and earnings growth continue to be driven by a strong
presence in the areas of Intelligence, Surveillance and
Reconnaissance; air & missile defense systems; border security;
air traffic management; training and homeland security; and cyber
security. Also, its non-platform centric focus insulates it from
cancellation or deferral of any specific platform programs.
Looking forward, the company enjoys strong order bookings and order
backlog, an improving balance sheet, and growing cash flow, besides
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 company presently
retains a short-term Zacks #2 Rank (Buy).
This is, 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. Thus, over the
longer run, we maintain our long-term Neutral recommendation on the
Based in Massachusetts, Raytheon Company is one of the largest
aerospace and defense companies in the U.S., with a diversified
line of military products, including missiles, radars, sensors,
surveillance and reconnaissance equipment, communication and
information systems, naval systems, air traffic control systems,
and technical services.