The Massachusetts Department of Transportation has awarded a
$130 million contract to
) and a team of local companies to upgrade its existing highway
Per the contract, Raytheon will replace the existing highway
tolling system with an advanced system that will automatically toll
vehicles as they travel under a gantry similar to an overhead
sign. Raytheon will utilize its expertise in sensors and
systems design to install the All Electronic Tolling System (AETS).
Once this new tolling system comes into use, drivers will be able
to pass through the toll station at highway speeds without needing
to stop. This will help reduce traffic congestion, travel times and
emissions from stop-and-go driving at existing toll plazas.
The new system will read the E-ZPass transponders fitted in the
vehicles and, in case a vehicle does not have a transponder, this
system will perform image base tolling. A toll invoice will then be
sent to the registered owner of the vehicle.
Raytheon will start installing the new tolling system from Apr 2015
and expects to complete it by Dec 2015. Per the contract, Raytheon
will convert the Western Massachusetts Turnpike (I-90),
Metropolitan Highway System, Sumner/Callahan and Ted Williams
Tunnels, and the Tobin Bridge.
We believe the need for good roads and busy highways could increase
the demand for advanced tolling systems going forward. Raytheon
with its expertise in this field will surely play a major role in
the tolling system market. In fact, the company had installed the
world's first AETS on the 407 Express Toll Route in Toronto, Canada
way back in 1997.
As the U.S. defense budget is under the axe, we believe both
foreign military sales and non-military domestic contracts like the
one mentioned above will help Raytheon to post steady performances.
The company in its recent second-quarter earnings release
reiterated its top-line guidance in the range of $22.5-$23.0
billion and earnings from continuing operations forecast in the
range of $6.75-$6.89 per share for 2014.
Raytheon currently holds a Zacks Rank #3 (Hold). Some better-ranked
stocks in the sector include The Boeing Company (
), Lockheed Martin Corporation (
) and Northrop Grumman Corporation (
). All these stocks hold a Zacks Rank #2 (Buy).
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