Raytheon's Space and Airborne Systems Awarded $42.8M Deal
Raytheon Company's RTN Space and Airborne Systems Division has won a $42.8 million contract for production of Identification Friend-or-Foe (IFF) KIV-77 Mode 4/5 cryptographic appliqué computers. Per the terms, the work will be carried out at Largo, FL and is expected to be completed by June 8, 2022.
The contract was awarded by the Air Force Life Cycle Management Center, Joint-Base San Antonio, TX. The deal includes military sales to multiple countries. Other than remote form factor and data, the contractor will also provide KIV-77 units and associated spare parts.
About KIV-77
IFF is the military designation of the Air Traffic Control (ATC) System is used to identify and track military aircraft. The KIV-77 Mode 4/5 crypto applique for IFF is a Type 1 certified equipment, operated by the National Security Agency. It provides the warfighter with the latest technology in secure air, land and surface combat-identification capability.
It provides information assurance for MK XIIA IFF interrogators and transponders with the help of Mode 4 and Mode 5. Of these two, Mode 5 IFF provides next-generation encrypted data link between interrogators and transponders and helps in identifying if the aircraft is friendly.
Our View
In the era of digitization, cyber threats have emerged as a new avenue for terrorists to spread worldwide mayhem. Defense companies like Raytheon, with a strong portfolio of cybersecurity products, surely take advantage of this situation by strengthening their cyber programs.
Toward this end, in Feb 2017, Raytheon's Forcepoint business acquired the Skyfence cloud access security broker business to expand and enhance its strategy to deliver cyber security systems. This merger will provide customers increased visibility, control and security as users interact with data wherever it resides, including within cloud applications
As a large-cap defense player, Raytheon holds a strong position due to its non-platform-centric focus. We believe, the consistent order inflow like the aforementioned one, coupled with its strong fortey in cybersecurity, will allow the company to continue on an upward growth trajectory, in days ahead.
Price Movement
Raytheon’s stock gained about 13.0% in the last 12 months, outperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain of 8.8%. Strong foreign military contracts along with rising demand from the Gulf countries and Asia-Pacific may have contributed to this outperformance.
The company also poses strong competition to its peers, including Ducommun Incorporated DCO and Curtiss-Wright Corporation CW.
Zacks Rank and Other Stock to Consider
Raytheon currently carries a Zacks Rank #2 (Buy). A better-ranked stock in the Aerospace-Defense Equipment space is Rockwell Collins, Inc. COL, boasting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Rockwell Collins delivered a positive earnings surprise of 2.29% in the first quarter. Its Zacks Consensus Estimate for 2017 moved up nearly 10.7% to $6.01 per share in the last 60 days.
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