) has been able to lock two small contacts, worth $64.5 million
in total or 40% of the Pentagon's defense funding list of Dec 9,
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The first contract, worth $35 million, is a modification of a
previously awarded contract to perform additional engineering
work on the MK-31 Rolling Airframe Missile (RAM) Guided-Missile
Weapon System (GMWS) improvement program. The company is entitled
to provide guided-missile round pack support and guided-missile
launching system support. Raytheon will continue working on this
project through Sep 2014.
The other contract, worth $29.5 million, is also a contract
modification of a previously awarded contract, where Raytheon is
responsible for the supply of the AN/SPY-1D(V) radar transmitter
group, missile fire control system MK 99 and site support for DDG
119. The defense major will also offer related technical services
to facilitate system testing, shipyard installation, and other
requirements through Jun 2017.
Though the contracts are not much to speak of, these still offer
some respite from severe budget austerities. To counter the
impact of defense budget cuts, the defense majors are relying on
foreign orders. Raytheon recently received the green light from
Pentagon for the sale of some 15,000 anti-tank missiles to Saudi
Arabia under two separate deals. Pegged at a combined value of
$1.1 billion, the anti-tank missiles will be used to counter
terrorism in this very politically volatile region.
The 2014 fiscal budget has nevertheless prioritized investments
in Missile and Space Systems, which is expected to bring in more
contracts for Raytheon. In addition, the company's focus on
technological advancements, as exemplified by its GaN systems,
will make defense solutions affordable and effective.
Raytheon's business consolidation efforts will also provide
successful cost-saving solutions, leading to an expanding
operating margin in the long term.
The Massachusetts-based defense contractor - Raytheon - currently
holds a Zacks Rank #1 (Strong Buy). Other stocks worth
considering in the defense sector include
The Boeing Co.
Huntington Ingalls Industries, Inc.
General Dynamics Corp
). The above stocks presently carry a Zacks Rank #2 (Buy).