The Department of Defense ("DoD") handed out a dozen contracts
worth nearly $1.4 billion recently. Among the biggest winners was
Lockheed Martin Corp.
), which won a whopping $852 million contract while
) snatched the second place receiving a $200.5 million
Raytheon's principal contract involves the supply of 354
AIM-9X Sidewinder Block II All Up Round Tactical Low Rate Initial
Production Lot 13 Missiles, plus 354 Block II Active Optical
Target Detectors to the U.S. military as well as Air Force. Also
included in the buyers' list are the governments of Morocco,
Malaysia, Kuwait and Oman.
The sidewinders are a short-range air-to-air missile used by
fighter jets, usually in battle against other fighter jets.
Currently, the missiles are being operated by the U.S. and nine
allied nations. To date, 5000 of the AIM-9X Sidewinders have been
The order also includes the delivery of 178 Block II Captive
Air Training Missiles ("CATMs"), which looks almost like a live
missile minus the warheads and rocket motors as well as 9 Special
Air Training Missiles, live missiles packed with telemetry
features in place of a warhead, which are used for test
The company will supply seven of the Special Air Training
Missiles to the U.S. Navy and ship two to Saudi Arabia along with
other related equipment. The contract is expected to be concluded
by Aug, 2015.
Raytheon's missile business has been the key growth engine for
the company as is evident from its second quarter operating
results. The company recently secured another contract from the
Missile Defense Agency, valued at $218.5 million, for the
completion of the assembling and delivery of 29 Standard
Missile-3 Block IB missiles.
Going forward, we believe the company's Integrated Defense and
Missile divisions will continue to act as a catalyst especially
with higher orders from Raytheon's Middle East clients in the
wake of rising security issues in that region.
In addition, Raytheon's focus on business diversification will
lend substantial upside to returns. The strategic buyout of
Visual Analytics Inc. at the end of the second quarter will
further boost the company's expertise in the field of data
analysis, an effective defense tool to counter terrorism.
Currently, Raytheon holds a Zacks Rank #1 (Strong Buy). Other
defense operators also worth mentioning are Zacks Ranked #1
Alliant Techsystems Inc.
) and Zacks Ranked #2 (Buy)
B/E Aerospace Inc.
ALLIANT TECHSYS (ATK): Free Stock Analysis
B/E AEROSPACE (BEAV): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
RAYTHEON CO (RTN): Free Stock Analysis Report
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