Raytheon Gets $155.6M German Deal

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Raytheon Company (RTN) has clinched a $155.6 million missile contract from the German navy. The deal allows Raytheon to construct Block 2 Rolling Airframe Missiles (“RAM”). This is the biggest exclusive RAM award made by Germany so far.

Per the deal, RAM Block 2 production will be done at Raytheon Missile Systems’ facilities in Tucson, Ariz. RAM is a mutual venture between the U.S. and German administrations with support from industry players like Raytheon and RAMSYS of Germany. RAMSYS as well as Raytheon will share this latest RAM production operation.

RAM is a light weight and supersonic missile used for defense against anti-ship cruise missiles and helicopters. The missile is already used on 100 or so ships in the U.S., Turkey, Japan, Greece, Egypt, Republic of Korea, and the United Arab Emirates. It is a type of self-governing dual-mode, passive radio frequency and infrared guidance designed missile that counters numerous threats simultaneously.

Based in Waltham, Mass., 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 remains focused on strong program execution, prudent capital management and strategic investments. In spite of the declining trend in U.S. defense spending, Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus. The company enjoys impressive order bookings and order backlog, an improving balance sheet, growing cash flow and operational enhancements.

However, these positives are offset by uncertainties related to 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 Rank #3 (Hold). Other stocks that look promising and worth accumulating now include Zacks Ranked #2 (Buy) FLIR Systems, Inc.  (FLIR), Textron Inc. (TXT) and Alliant Techsystems Inc. (ATK).

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