Raytheon Company (RTN) has been awarded an $80.8 million contract modification from the U.S. Navy in support of a Foreign Military Sale of the AN/AQS-22 Airborne Low Frequency Sonar (“ALFS”) to the Royal Australian Navy. ALFS is the primary undersea warfare sensor for the U.S. Navy's MH-60R multimission helicopter.
ALFS provides critical undersea warfare mission support capabilities, including submarine detection, tracking, localization, classification, acoustic intercept, underwater communication and environmental data collection.
This contract modification follows two previously awarded contracts, totaling $141.5 million, for ALFS systems, spares and repairs for U.S. Navy inventory. The first contract, awarded by Naval Air Systems Command, was valued at $81.7 million for the manufacture, integration, testing and delivery of ALFS systems for the U.S. Navy. The second contract, from Defense Logistics Agency Aviation Strategic Acquisition, valued at $59.8 million, provided for spares and weapons replaceable assemblies for fleet-deployed systems, systems under test, and helicopter maintenance trainer assets.
ALFS is deployed as the primary anti-submarine warfare sensor onboard the MH-60R helicopter, charged with defending surface ships before submarines come within range to launch an attack.
Raytheon is one of the best-positioned companies among the large-cap defense players. 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. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Raytheon is slated to release its fourth quarter 2011 results on January 26, 2012. The Zacks Consensus Estimate for the reported quarter is $1.34. The estimates have not changed in the last 30 days, implying that the analysts do not see any near-term catalyst and expect the company to report in line.
Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S. 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. Some of its primary competitors include The Boeing Company (BA) and Lockheed Martin Corporation (LMT).
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