Raytheon Gets Phalanx Contract - Analyst Blog

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Raytheon Company ( RTN ) has received a $57.8 million contract for overhaul and modernization of 9 Phalanx Close-In Weapon Systems, production of 2 SeaRAM anti-ship missile defense systems and order for 20 radar upgrade kits.

The Phalanx Close-In Weapon System ("CIWS") is an anti-ship missile defense system that consists of a guided 20mm Gatling gun mounted on a swiveling base. Its rapid-fire, computer-controlled radar with its automated-nature of operation effectively tracks and destroys enemy threats that have infiltrated other ship defense systems. It was manufactured by Pomona Division, an erstwhile unit of General Dynamics Corporation ( GD ) and now a part of Raytheon.

SeaRAM combines the features of Phalanx CIWS and the Rolling Airframe Missile ("RAM") Guided Weapon System. Therefore, it has Phalanx Block 1B's high resolution search-and-track sensor systems and reliable quick-response capability and RAM's superior accuracy, extended range and high maneuverability.

Among the large-cap defense players, Raytheon is one of the best-positioned companies. Through the constant upgrade of ship self-defense systems, to meet the evolving nature of threats and computer technology, the company has successfully met its customers' requirements. Phalanx and SeaRAM are defense solutions that lead the world in scalable technology as well as provide supreme protection.

Going forward, the company enjoys an improving balance sheet, growing cash flow, and operational improvements. We expect future growth will be driven by its focus on Intelligence, Surveillance and Reconnaissance unmanned systems, training, cyber security, Standard Missile-6, and Theatre High Altitude Area Defense.

This is, however, offset by apprehensions over cutbacks in 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.

Based in Massachusetts, Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. Raytheon 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.



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