FAA Rewards Harris a Big Contract

Zacks

Harris Corporation (HRS) – a leader in the public safety and professional communication market, has received a seven-year contract worth $331 million that entails them to provide highly reliable air and ground data communications services for a key Federal Aviation Administration (FAA) program.  

Per the terms of the Data Communication Integrated Service (:DCIS) contract the Melbourne, Florida-based company will provide management and delivery of data communication service that will transform voice-based air traffic control (ATC) to automated air traffic management for future requirement. The contract also contains 10 one-year options that could extend the duration till 2029. 

The Harris DCIS team includes leading aviation and communications innovators with huge experience and includes Adfero Group, American Airlines, a subsidiary of AMR Corporation (AAMRQ), ARINC, The Brattle group, CGH, General Electric Company (GE) and six other companies. The DCIS contract will offer highly reliable ATC communications, improved arrival/departure routes, and reduced emissions propelling fuel efficiency as a result.  

Since long, Harris has been developing and integrating system solutions for the FAA in support of the National Airspace System (:NAS). We believe the contract will not only strengthen its Government Communication Systems order book but will also provide solid stability to the above-mentioned segment. The company will continue to win many such contracts as it has been selected as a prime contractor for FAA Telecom infrastructure (FTI) initiative of National Airspace System (:NAS).

The current Zacks Consensus Estimate for Harris Corp. is pegged at $1.12 for the fiscal first quarter 2013 with a growth rate estimate of 5.92%. For fiscal years 2013 and 2014, the Zacks Consensus Estimates stand at $5.15 and $5.28 with a growth rate of (0.91%) and 2.52% respectively.

Recommendation:

Considering the fundamentals, we maintain our long-term Neutral recommendation on Harris Corp. Currently, HRS has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

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