Raytheon Company (RTN) received a contract, worth $ 42 million, for the initial concept development and program planning for the Standard Missile-3 (SM-3) Block IIB. The SM-3 Block IIB is the Missile Defense Agency's next-generation Aegis missile.
The SM-3 is being developed as part of the Missile Defense Agency's sea-based Aegis Ballistic Missile Defense System. It has successfully defeated 18 incoming ballistic missile threats in realistic test scenarios. Standard Missile technology has evolved to keep pace with ever more critical threats and grow into new missions. It was initially developed as a replacement for the Terrier, Talos and Tartar surface-to-air missiles.
Raytheon is the lowest-risk, lowest-cost, most-technically capable provider of missile defense solutions. As a part of its contract with the Missile Defense Agency, Raytheon has already delivered more than 130 SM-3s ahead of schedule.
Raytheon enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, and operational improvements. Future growth will be driven by its focus on Intelligence, Surveillance and Reconnaissance unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD programs.
This is, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. Thus in the absence of any positive triggers, we advise a long-term neutral rating. The company presently retains a short-term Zacks #2 Rank (Buy).
Based in Waltham, Massachusetts, Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of command, control, communications and intelligence systems, as well as a broad range of mission support services. Some of its main competitors are The Boeing Company (BA) and Northrop Grumman Corporation (NOC).
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