Raytheon Company’s RTN Integrated Defense Systems (IDS) business segment recently secured a contract worth $641.6 million to perform Ballistic Missile Defense System (BMDS) test related activities for multiple radar platforms. Work related to this will be carried out in Huntsville, AL and Colorado Springs, CO.
Details of the Deal
The contract was awarded by the Missile Defense Agency, Huntsville, AL. The BMDS test involves planning, executing, and analyzing sensor performance in BMDS flight tests and ground tests for each test event defined in the BMDS integrated master test plan. It also includes sensors modeling and simulation activities to include Open Systems Architecture Sensor Model (OSM) and Open Systems Architecture Signal Injector (OSI) development and maintenance, integration of OSI with hardware-in-the-loop radar representation, integration of OSI and OSM with the simulation framework, verification and validation support, and stakeholder/event support.
Raytheon will utilize fiscal 2017 and 2018 research, development, test and evaluation funds to partly finance the task. The ordering period is from Jan 12, 2018, through Jan 11, 2023, with a one-year option period provided in the contract.
Features of IDS Unit
Raytheon’s IDS segment enjoys a leading position in integrated air and missile defense; large land- and sea-based radar solutions; command, control, communications, computers, cyber and intelligence solutions; and naval combat and ship electronic systems. The segment delivers combat-proven performance against the complete spectrum of airborne and ballistic missile threats and is a world leader in the technology, development, and production of sensors and mission systems.
The United States and developed nations of Europe already enjoy a dominant position in the defense industry. With increasing geo-political tensions across the globe, Asian nations like India and Japan have started to take initiatives to ramp up their arsenal. With rapid upgradation in technology, missile defense has emerged as an integral part of defense strategy for all countries.
As a result, missile-makers like Raytheon, Northrop Grumman Corp. NOC, Lockheed Martin Corp. LMT and Orbital ATK OA have ample growth opportunities in the global missile defense market. Evidently, the missile defense systems market is expected to grow at a CAGR of 2.18%, from 2017 to 2027 with a value of $41 billion (according to ReportLinker).
Raytheon has a strong forte in the multi-billion dollar missile defense market. Its proven interceptors, radars and space sensors provide protection against ballistic missiles, cruise missiles, aircraft and other threats.
Anticipating stronger bookings, Raytheon raised its fourth-quarter and full-year sales outlook for the IDS segment. Impressively, the company also expects to witness uplift in this segment during 2018, to which we believe notable contract wins like the latest one will contribute substantially.
Raytheon’s shares moved up about 35.3% in a year’s time compared with the broader industry’s gain of 34.8%. The outperformance may have been driven by rising demand for the company’s missile systems from the Gulf countries and Asia Pacific, apart from domestic customers.
Raytheon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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