Raytheon Company (RTN) has received a contract from the U.S. Air Force to provide up to 18 Deployable Radar Approach Control (D-RAPCON) systems. The contract will likely be worth $260 million though Raytheon has been authorized $50.6 million for the early development stage of the D-RAPCON units.
These rapidly deployable air traffic control (“ATC”) systems can be delivered anywhere in the world for use in military, humanitarian, and emergency missions, the company said, and can be set up and be operational within six hours.
The D-RAPCON system comprises a transportable antenna plus three trailer-sized shelters which with the help of multiple controller work stations lodge radar equipment, communications systems, and an operations center. With its latest digital sensors, communications equipment and advanced surveillance data processing systems, D-RAPCON provides sequencing, separation of aircraft, navigation assistance and airspace control services.
Raytheon is one of the best-positioned companies among the large-cap defense players. Recently, the company indicated that it is set to clinch a $2.1 billion arms deal to sell Oman an air defense system during the U.S. Secretary of State John Kerry’s visit in the Gulf state this week. The company’s international opportunities encompass the Kuwait Patriot, the Oman ground-based air defense system, the Qatar air defense system, air traffic management, as well as radars and missiles. With the finalization of the Oman deal, Raytheon seems to be well on-track with these opportunities.
Looking forward, with its newly re-aligned segments, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow and operational improvements. This is, however, offset by apprehensions over the future growth of 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).
However, stocks worth considering at present are Erickson Air-Crane Inc. (EAC), Alliant Techsystems Inc. (ATK) and Wesco Aircraft Holdings, Inc. (WAIR). While Erickson Air-Crane carries a Zacks Rank #1 (Strong Buy), Alliant Techsystems and Wesco Aircraft hold a Zacks Rank #2 (Buy).
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