) has received a $79 million contract from the U.S. Navy for 47
more Navy Multiband Terminal (NMT) systems.
NMT is one of three Raytheon Advanced Extremely High Frequency
(AEHF) terminals that are in production. The other two are the U.S.
Army's Secure Mobile Anti-jam Reliable Tactical Terminal and the
U.S. Air Force's Minuteman Minimum Essential Emergency
Communications Network Program Upgrade. Raytheon is the only
provider of deployed AEHF terminals to the U.S. armed forces.
NMT has been in production since 2010. In total, Raytheon is
expected to field more than 350 AEHF NMT terminals to the U.S. and
international partners under the production contract. The NMT
system incorporates Raytheon's demonstrated XDR waveform, a complex
protected communications protocol which is implemented in hardware
and software. XDR provides users with increased bandwidth and
speed, enabling strategic and tactical military communications.
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 (ISR); 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
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 stock.
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. Some of its main competitors include
The Boeing Company
Lockheed Martin Corporation
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