Aerospace and defense major Raytheon Company ( RTN ) has been awarded a $9.9 million contract by Pentagon to continue with research and development work on Border Tunnel Activity Detection Systems in Egypt. The contract is provided under an Egyptian Foreign Military Sales Letter of Agreement with the U.S. Army Corps of Engineers.
On detection, the Egyptian authorities will plug these tunnels which were abused by terrorists to smuggle arms across the border into Gaza for use against Israel. According to rough estimates, nearly 2,000 tunnels still exist in the Egypt and Gaza border.
Raytheon possesses advanced technology in detecting tunnels. In Apr 2009, the company received a $19 million contract from the Defense Advanced Research Projects Agency for the development and demonstration of technology to detect and locate buried land mines and tunnels.
The Egyptian government is also taking due steps to destroy these tunnels and, as per directives issued by the Cairo court, it has already destroyed a few of the existing tunnels. However, a good number of them still remain. The primary problem is their detection, as these tunnels are concealed very craftily.
Raytheon with its advanced sensor technology and MONARCH-equipped sensor on the Seismic and Acoustic Vibration Imaging program will be able to detect more tunnels, invisible to human eyes. The destruction of these tunnels will be a major counter-terrorist move, easing to some extent the violence that has despoiled the region.
This contract is a part of an $801 million contact award made by the Pentagon on Aug 28, 2013. Other publicly traded companies receiving minor contracts included Southern Company ( SO ) and Valeant Pharmaceuticals ( VRX ) among others. A Southern Company unit received a contract worth $16.1 million to supply power to different agency locations in California. Through a $13.5 million contract, Valeant will supply various medicines and surgical items in different agency locations in California.
Raytheon presently carries a short-term Zacks Rank #2 (Buy). Another leading defense operator, Lockheed Martin Corporation ( LMT ), is also performing well and shares the same Zacks Rank.