Raytheon Gets Contract Extension - Analyst Blog
Raytheon Company ( RTN ) clinched an extended Lot 2 contract to carry on with the full production of High-Speed Anti-Radiation Missile ("HARM") Control Section Modification ("HCSM") upgrade units. The U.S. Air Force contract is priced at $14 million.
Raytheon has collaborated with Honeywell International Inc. ( HON ), Rockwell Collins Inc. ( COL ) and others for the HCSM program. The HCSM components are scheduled for shipment in the fourth quarter of 2013.
The HARM missile is a major battle space product which suppresses or destroys surface-to-air missile radars, early warning radars and radar-directed air defense artillery systems. The HCSM modernization includes the addition of a Global Positioning Satellite receiver and an improved inertial measurement unit that improves navigation accuracy.
This would give HARM the ability to engage time-critical targets thus making enemy airspace worldwide safer for U.S. and allied war fighters. The HCSM system also includes a digital flight computer that combines targeting solutions from navigation and seeker systems.
Raytheon initiated modification work on the existing HARMs in early 2013 when it received a contract extension worth $12.3 million. The company is one of the few major defense players that have added some high-priced contracts to its portfolio.
Notable recent wins include the $136.2 million contract from the Navy to remanufacture, overhaul and upgrade 19 Phalanx Close-in Weapon Systems and produce four SeaRAM Anti-ship Missile Defense Systems.
Besides securing sizeable domestic contracts, Raytheon picked up international contracts as well. Last month, the company debuted with its first border security contract in Southeast Asia by receiving a Defense Threat Reduction Agency maritime deal from the Philippines government.
Raytheon is also keen on technological advancements. Its latest offering was a remotely operated, mast-mounted, long-range reconnaissance and surveillance forward looking infrared system which improves situational awareness in battlefield conditions and increases the safety of land forces.
The blend of domestic as well as foreign contracts bodes well for the company's long-term growth prospects. Currently, Raytheon carries a Zacks Rank #2 (Buy). Another well-placed defense operator is Zacks Ranked #2 Northrop Grumman Corp. ( NOC ).
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