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Harris (HRS) Secures DIA's $500 Million HELIOS Contract

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Harris (HRS) Secures DIA's $500 Million HELIOS Contract

Harris (HRS) is the only local company to win the 10-year contract to provide services on the High Energy Laser and Integrated Optical-dazzler with Surveillance system.

Harris Corporation HRS along with seven other defense companies and one research organization recently secured a $500 million contract from the U.S. Defense Intelligence Agency (“DIA”) to provide services on the High Energy Laser and Integrated Optical-dazzler with Surveillance system or HELIOS. The 10-year contract has a base period of five years with five additional one-year options.

The HELIOS program brings together laser weapon, long-range intelligence, surveillance and reconnaissance and counter-Unmanned Aerial System capabilities to increase situational awareness and layered defense options to combat forces. Mission areas for HELIOS include space situational awareness, foreign counter space threats, Internet of Things, data exfiltration and rapid prototyping. The program is expected to be completed in September 2028.

Importantly, the location of the work will depend on which of the nine organizations win services contract. Harris is the only local company.

Lockheed Martin Corp. LMT and Northrop Grumman Corp. NOC are also part of the work agreement. Lockheed Martin also won a contract with the U.S. Navy valued at $88 million, which involves low-rate initial production of the F-35 Lightning II aircraft under order Lot 11. The F-35 is a multirole aircraft designed for air-to-air, air-to-ground, electronic attack and intelligence, surveillance and reconnaissance missions.

Harris has been working with F-35 industry partners from the program’s inception through the aircraft’s first deployment in 2015. The company provides the F-35 with cockpit communications, data processing, sophisticated avionics and electronic warfare technology.

Its avionics infrastructure and electronics provide more efficient, affordable and higher-performance capabilities in keeping with the F-35’s status as the next generation standard bearer of U.S. global air power. In April 2018, Harris delivered more than 1 million avionics components to Lockheed Martin for the F-35 Lightning II.

The F-35 program represents nearly 400 jobs and hundreds of millions in revenues for Harris each year in addition to hundreds of other suppliers throughout the United States. Such contract wins are likely to enhance the company’s revenues, which have witnessed a compound annual growth rate of 16.7% from fiscal 2015 to fiscal 2018.

Over the past three months, shares of Harris have gained 14.5% compared with 12.3% growth for the industry.

Harris currently has a Zacks Rank #3 (Hold). A better-ranked stock in the industry is Ribbon Communications Inc. RBBN, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ribbon Communications has a long-term earnings growth expectation of 12%. It beat earnings estimates in each of the trailing four quarters, the average surprise being 168.1%.         

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