Raytheon Gets Navy Contract - Analyst Blog

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Raytheon Company ( RTN ) has been awarded a $254 million contract modification for the completion of software development for the DDG 1000-class destroyer program.

Under the contract, Raytheon Integrated Defense Systems will perform development engineering activities for Total Ship Computing Environment Infrastructure integration, ship control systems, as well as associated Mission Systems Equipment software development and integration.

The contract modification includes development, test and delivery of DDG 1000 Total Ship Computing Environment (TSCE) software for Self Defense Test Ship, post-delivery availability, post-shakedown availability, volume search software and firmware development, as well as software maintenance in support of the Zumwalt-class destroyer program. 

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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