Raytheon Company
(
RTN
) has been awarded a $226.8 million firm-fixed-price, multi-year
support contract for Evolved Seasparrow Missiles production
requirements. The Naval Sea Systems Command, Washington, D.C. is
the contracting activity.
The contract includes options which, if exercised, would bring
the cumulative value of this contract to $259.9 million.
This contract combines purchases for the U.S. Navy (83.47%); the
Governments of Australia (1.13%); Denmark (1.42%); Canada
(2.87%); Germany (2.36%); Norway (0.60%); Greece (1.37%); the
Netherlands (2.29%); Spain (0.04%); and Turkey (0.84%) as part of
the NATO Seasparrow Consortium; and Japan (0.08%) and Thailand
(3.53%) as Foreign Military Sales.
Work on the contract will be performed in Tucson, Arizona (19%);
Norway (13%); Germany (11%); Australia (10%); Canada (9%);
Andover, Massachusetts (7%); the Netherlands (6%); San Jose,
California (4%); Spain (4%); Greece (3%); Camden, Arkansas. (3%);
McKinney, Texas (3%); Turkey (2%); Beverly, Massachusetts (1%);
Minneapolis, Minnesota (1%); Reston, Virginia (1%); Cincinnati,
Ohio (1%); Cheshire, Connecticut (1%); and Denmark (1%). Raytheon
expects to complete work on the contract by September 2016.
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 high-tech 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.
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
approximately $35 billion at the end of the first nine months of
2012.
Raytheon plays an important role in missile defense and is
ideally positioned to help the U.S. and its allies achieve
current and future missile defense goals. Given the declining
trend in the U.S. defense spending, the company is one of the
best-positioned companies among the large-cap defense players.
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 specific platform
programs.
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.
However, these positives are offset by apprehensions over the
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. The company
presently retains a short-term Zacks #3 Rank (Hold). The company
mainly competes with
L-3 Communications Holdings Inc.
(
LLL
) and
FLIR Systems Inc.
(
FLIR
).
FLIR SYSTEMS (FLIR): Free Stock Analysis
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L-3 COMM HLDGS (LLL): Free Stock Analysis
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RAYTHEON CO (RTN): Free Stock Analysis Report
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