) has received a contract from the U.S. Navy, worth $108 million,
to continue the production of Standard Missile-2 ("SM-2"). These
missiles will be sold to the U.S. allies through foreign military
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Standard Missile-2 is the world's leading fleet-area air defense
weapon. It provides protection against a wide range of advanced
threats. It has been integrated with both Aegis and non-Aegis
combat weapon systems that provide high- and low-altitude
intercept capabilities and performance against advanced anti-ship
missile threats. The SM-2 also has a secondary anti-surface ship
mission, and uses tail controls and a solid-fuel rocket motor for
impulsion and maneuverability.
The missile can be launched from the MK-41, MK-13 and MK-26
launchers. The most advanced variant, the SM-2 Block IV, has
successfully intercepted and destroyed short-range ballistic
missile targets, demonstrating the weapon's ability to stop
ballistic missile threats in their final phases of flight.
Since long, SM-2 has been the primary surface-to-air fleet-air
defense weapon of choice for U.S. Navy. In fact, it has
been deployed by the U.S. and eight allied navies. The U.S Navy
has committed to continue to consign for SM-2 over the long term.
This contract proves that it still continues to keep SM-2s in
The SM-2 family continues to grow internationally. Countries like
Australia, Canada, Germany, Japan, Korea, the Netherlands, Spain
and Taiwan have deployed surface combatants. Moreover, several
other navies are executing ship configurations to support SM-2
Apart from Standard Missiles, the Raytheon is also busy with
AN/TPY-2 Radars. Recently, it had received a firm-fixed price
contract modification worth $207.9 million to manufacture and
deliver the AN/TPY-2 Radar #11 with associated spares and three
forward-based Prime Power Units with associated spares.
We believe that Raytheon is one of the best-positioned companies
among the large-cap defense players, due to its
non-platform-centric focus, rising international sales,
substantial presence in classified market, and its focus on
However, going forward we remain concerned owing to apprehensions
over the future growth in the U.S. defense budget, the fate of
high-cost programs, risks related to key project executions and
Like its peers,
FLIR Systems, Inc.
L-3 Communications Holdings Inc.
), Raytheon presently retains a short-term Zacks #3 Rank (Hold).
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.