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Raytheon Secures $30M Navy Deal to Support F/A18 Fighter Jet

Zacks Equity Research

Raytheon Company RTN recently secured a $29.8-million contract for the full-rate production of 82 control, dispenser, decoy and countermeasures-integrated, multi-platform launch controllers for Boeing’s BA F/A18 aircraft, under the 14th lot. The contract was awarded by the Naval Air Systems Command, Patuxent River, MD.

Majority of work related to the deal will be executed in Forrest, MS; Andover, MA; and various other locations across the United States. The entire work is expected to get completed in February 2022.

What Favors Raytheon?

Increasing geopolitical tensions across the globe have prompted nations, both developed and developing, to strengthen their defense systems manifold. With a rapid technological upgrade, identifying threats beforehand has become increasingly crucial and sensors play an essential role in that. To this end, being a prime defense contractor in the United States, Raytheon holds a significant position in the U.S. sensor systems market. The latest contract win is an example of the company’s growing market share in the U.S. defense space.

Such contract flows also boost the company’s Space and Airborne Systems (SAS) unit, which develops integrated aircraft communication and sensor systems. The segment registered annual sales growth of 13% in the second quarter of 2019. Considering the latest contract win, we can expect this unit to deliver similar top-line growth in the days ahead.

Recent Budgetary Advancements to Aid Raytheon

The fiscal 2020 defense budget, which has been approved by both the US. Senate and the U.S. House of Representatives, includes a spending plan of $57.7 billion on aircraft, reflecting a massive surge of 166% from the approved fiscal 2019 defense spending. Notably, this increased spending provision, in turn, should usher in more contracts for Raytheon for aircraft equipment and spares.

Price Performance

Shares of the company have gained 1.3% in the past six months compared with the industry’s growth of 12.5%.



Zacks Rank & Key Picks    

Raytheon currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same space are Aerojet Rocketdyne Holdings AJRD and Teledyne Technologies Incorporated TDY, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 25.46% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 13.8% to $1.90 in the past 90 days.

Teledyne Technologies pulled off average positive earnings surprise of 9.26% in the trailing four quarters. The Zacks Consensus Estimate for 2019 earnings has moved 6.6% north to $10 in the past 90 days.

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The Boeing Company (BA) : Free Stock Analysis Report
 
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