Raytheon Wins More DoD Contracts
Raytheon Company (RTN) was able to seal two contracts from the U.S. Department of Defense (DoD) on Sep 20, 2013.
The first contract, worth $79.3 million, is a cost-plus-fixed-fee, non-option-eligible, multi-year services contract. It involves support of 39 air-traffic navigation, integration, and coordination systems, along with 21 fixed-base precision approach radar systems. The deal also takes into consideration associated equipment for the Army's Product Management Office for Air Traffic Control Systems and Communication-Electronics Command, Logistics Readiness Center.
In addition to this contract, the defense major also received a $38.6 million indefinite-delivery/indefinite-quantity contract. This contract entails Raytheon to supply and provide services required for the production and sustainment of Miniaturized Airborne Global Positioning Systems Receiver, or MAGR, 2000-S24s.
These devices are mainly used by military aircraft to locate their position, velocity, and facilitate in the navigation. Raytheon expects to finish the work on this contract by Sep 30, 2017. Apart from delivering these MAGR 2000-S24 units to the U.S. forces, some units will also be deployed to NATO and other allied countries.
Although Raytheon not unlike its peers is faced with defense budget related uncertainties, it seems to be immune to some extent to defense budget cuts. The company is one of the few major defense players that have added some high-priced contracts to its portfolio.
Recently, the company has been able to clinch a $136.2 million contract from the Navy to remanufacture, overhaul and upgrade 19 Phalanx Close-in Weapon Systems and produce four SeaRAM Anti-ship Missile Defense Systems.
The company also remains active in picking up international contracts besides securing sizeable domestic contracts. Last month, the company debuted with its first border security contract in Southeast Asia by receiving a Defense Threat Reduction Agency maritime deal from the Philippines government.
We expect the company to remain well positioned on the back of its investments in technology and innovations and a steady flow of both domestic and international contracts. Currently, Raytheon carries a Zacks Rank #2 (Buy).
Other well-placed defense operators include Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC) and Alliant Techsystems Inc. (ATK). While Lockheed Martin and Alliant Techsystems sport a Zacks Rank #1 (Strong Buy), Northrop holds a Zacks Rank #2 (Buy).
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