Raytheon Company ( RTN ) has received a Foreign Military Sales ("FMS") contract worth $685.7 million from the U.S. Army Aviation and Missile Command, Redstone Arsenal, Alabama for additional new fire units of the combat-proven Patriot Air and Missile Defense System for Taiwan.
Patriot is a long-range, all-altitude, all-weather air defense system to counter tactical ballistic missiles, cruise missiles and advanced aircraft. It is the world's most competent air and missile defense system that protects against a full range of advanced threats, including aircraft, tactical ballistic missiles, cruise missiles and unmanned aerial vehicles. With these new Patriot fire units, the company will provide new advanced technology, improved man-machine interface and reduced life-cycle costs to the Patriot Air and Missile Defense System.
The team will work under the contract at Raytheon's Integrated Air Defense Center, Andover, Massachusetts; El Paso, Texas; and Huntsville, Alabama.
Raytheon is the prime contractor for both domestic and international Patriot Air and Missile Defense Systems and system integrator for Patriot Advanced Capability-3 missiles. The company has been partnering with Taiwan for more than 45 years.
The company's contract with Taiwan includes a $79 million FMS order in 2008 to provide it with upgraded kits and related engineering and technical services for Patriot Configuration-3 radar and a $1.1 billion contract in 2009 to provide new-production systems of the Patriot Air and Missile Defense System. Earlier in 2011, the company delivered the first Configuration-3 upgraded radar system to Taiwan, 10 months ahead of schedule.
Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services.
Raytheon is one of the best-positioned companies and enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements. This is, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations.The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. The company mainly competes with Lockheed Martin Corporation ( LMT ) and Northrop Grumman Corporation ( NOC ).