Raytheon Wins $1B Navy Contract for New Tactical Jammer
Raytheon Company RTN has won a contract worth $1.0 billion from the U.S. Navy for the development of 15 Next Generation Jammer (“NGJ”) engineering development model pods. Contracting activity is Naval Air Systems Command, Patuxent River, MD.
This contract covers the engineering and manufacturing development phase of the NGJ. The new tactical jammer will replace the ALQ-99 tactical jamming system, which is more than 40 years old. The ALQ-99 is presently used on the U.S. Navy EA-18G electronic attack aircraft manufactured by The Boeing Company BA. In 2013, Raytheon was chosen for the program.
Under this phase, Raytheon’s work includes designing, producing, integrating, demonstrating and testing of the NGJ.
Per the contract, Raytheon will also manufacture 14 NGJ aero-mechanical test pods to guarantee flying qualities of the aircraft and the pod safe separation from the host aircraft. Supplying equipment for system integration laboratories and established manufacturing processes are also part of the contract.
Work is scheduled to be complete by Dec 2020. The company will carry out the majority of the work in El Segundo, CA, while the rest will be performed in Forrest, MS; Dallas, TX; McKinney, TX; Torrance, CA; Ft. Wayne, IN; Marion, VA; San Diego, CA; Andover, MA; and Tucson, AZ.
The contract will use fiscal 2016 research, development, testing and evaluation (Navy) funds.
The pod-based tactical jammer NGJ system has been built with open-architecture technology using Raytheon's airborne radio frequency systems, jamming techniques, combat-proven antenna array technology, and enhanced solid-state electronics. The new jammer system was designed to address electronic warfare mission requirements of the Navy, while ensuring a cost-effective open systems architecture that can support future up-gradation.
Raytheon is one of the best-positioned large-cap defense players due to its non-platform-centric focus. Going forward, we expect the company to continue to remain well positioned based on its realigned segments, international exposure, strong order bookings and order backlog, cash deployment strategy, improving balance sheet, growing cash flow and cost reduction initiatives.
The company has been enjoying a steady stream of contracts from several government establishments. As a result, total backlog at the end of the fourth quarter of 2015 was $34.7 billion, up from $33.6 billion at 2014 end.
Raytheon currently has a Zacks Rank #3 (Hold).
Stocks to Consider
A couple of better-ranked stocks in the same space include Rockwell Collins Inc. COL and Spirit AeroSystems Holdings, Inc. SPR. While Rockwell Collins sports a Zacks Rank #1 (Strong Buy), Spirit AeroSystems carries a Zacks Rank #2 (Buy).
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