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RTN Gets Nod for Missile Upgrade - Analyst Blog

Raytheon Company ( RTN ) has received consent from the U.S. Congressional and State Department for upgrading the Patriot Air and Missile Defense System for the Kingdom of Saudi Arabia to the latest Configuration-3.

In June this year, the company had received a Direct Commercial Sales contract worth $1.7 billion that included ground-system hardware, a full training package, support equipment upgrades and an interoperability capability to support potential coalition operations.

Patriot is the affordable, low-risk and effective air and missile defense system of choice of 12 countries around the globe. It is a long-range, all-altitude, all-weather air defense system that counters tactical ballistic missiles, cruise missiles and advanced aircraft. It is co-manufactured by Raytheon and Lockheed Martin Missiles and Fire Control, a business unit of Lockheed Martin Corporation ( LMT ).

Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements. Future growth will be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD.

The positives are, 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.

In October this year, Raytheon Company reported third-quarter 2011 adjusted earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.33. Revenue reported by Raytheon in the quarter under review was $6.13 billion, down 2% from $6.27 billion in the year-ago period and also short of the Zacks Consensus Estimate of $6.39 billion.

Based in Waltham, Massachusetts, 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.

LOCKHEED MARTIN ( LMT ): Free Stock Analysis Report

RAYTHEON CO ( RTN ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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