Raytheon Company (RTN), one of the largest aerospace and defense companies in the U.S., received a contract from the U.S. Air Force for the supply of more than 1,900 KIV-77 Mode 4 / 5 cryptographic units that provide secure communications for combat systems force identification. The value of the contract is $20.7 million.
With this award, Raytheon has total orders for 3,600 KIV-77 units. This also includes the program's low rate initial production phase under which approximately 1,000 KIV-77 units have already been delivered ahead of contract schedule.
Overall, Raytheon is under a contract that permits KIV-77 additional orders and deliveries into 2014. Moreover, the company expects this unit to be in continual production through 2020.
KIV-77 unit is a premier cryptographic device for combat identification and provides information assurance for MK XIIA IFF interrogators and transponders using Mode 4 and Mode 5.
Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus. Looking forward, 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 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, thecompany at present retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Massachusetts, Raytheon Company deals with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services. Major competitors of the company are Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
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