) was awarded two missile contracts by the Department of Defense
(DoD). The total value of the agreement is $70.5 million.
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The lion's share of these contracts, worth $49.9 million,
comprises of the modification of the existing contract that
allows Raytheon to perform engineering work on Standard Missile-3
Block IB ("SM-3IB").
SM-3IB is the newest version of Raytheon's Standard
surface-to-air missile. It seeks to improve upon the efficiency
of the original missile with the employment of short bursts of
precision propulsion to steer the missile toward incoming
targets. The new SM-3IB also has an improved, two-color infrared
seeker. The company expects SM-3IB to be in service in 2015 and
finish work by Dec 31, 2013.
The other deal for Raytheon has a contract value of $20.6 million
and is the modification of the earlier agreement that was awarded
by DoD to secure tube-launched, optically tracked,
wireless-guided missiles. To date, considering the latest
modification contract, Raytheon's total contract value associated
with this particular missile comes to $203 million.
Waltham, Mass.-based Raytheon Company is a technology and
innovation leader specializing in defense, homeland security and
other government markets throughout the world. Its Missile
Systems division registered a 4.2% year-over-year increase in
revenue in the fourth quarter of 2012. The upside was mainly
attributable to higher sales on the Standard Missile-3 (SM-3) and
Rolling Airframe Missile (RAM) programs.
In spite of the declining trend in U.S. defense spending,
Raytheon is one of the better-positioned companies among the
large-cap defense players due to its non-platform-centric focus.
The company enjoys impressive order bookings and order backlog,
an improving balance sheet, growing cash flow and operational
Recently, the company has realigned its segments to streamline
operations, increase productivity and achieve stronger alignment
with customers' preferences. In response to a challenging defense
and aerospace market environment, Raytheon's new structure is
expected to improve efficiency with more focus on worldwide
Raytheon presently retains a short-term Zacks Rank #3 (Hold).
Other stocks that look promising and are worth accumulating now
include Zacks Ranked #1 (Strong Buy)
FLIR Systems, Inc.
), and Zacks Rank #2 (Buy) stocks
Alliant Techsystems Inc.