Raytheon Company (RTN) has completed the production of an Antenna Equipment Unit (AEU) for the ninth AN/TPY-2 ballistic missile defense radar. The completion of the AEU unit, one of the four critical components of the AN/TPY-2 ballistic missile defense radar, would ensure its timely delivery in early 2014.
AN/TPY-2 is a mobile X-band radar that helps in protecting the U.S. warfighters and America's allies and security partners. It is an integral part of the Ballistic Missile Defense System (BMDS). The AN/TPY-2 discriminates between threats and non-threats, acquires and tracks threat ballistic missiles. Moreover, it is capable of providing long-range acquisition, precision track, and discrimination of short-, medium- and intermediate-range ballistic missiles.
AN/TPY-2 has performed at both terminal and forward-based mode in all major tests perfectly. The AN/TPY-2 may be deployed globally in either terminal or forward-based mode. In terminal mode, the AN/TPY-2 serves the THAAD weapon system that allows the THAAD missile to intercept and destroy threats while in the forward-based mode, the AN/TPY-2 detects and discriminates enemy ballistic missiles, thus strengthening the BMDS.
Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus. The company continues to maintain its track record of delivering the AN/TPY-2 on cost and on schedule.
Although Raytheon like its peers faces uncertainty related to the defense budget, it seems to be immune to some extent to defense budget cuts. The president's defense budget for FY14 would maintain or augment funding for most of the company’s biggest programs, which include the Standard Missile-3 (SM-3) interceptor, the Advanced Medium-Range Air to Air Missile and the SM-2 and SM-6 ship defense missiles. Other programs include AIM-9X Sidewinder, Evolved SeaSparrow, Javelin anti-tank missile, Joint Standoff Weapon, Rolling Airframe Missile, Small Diameter Bomb II and Tactical Tomahawk.
The company presently retains a short-term Zacks Rank #2 (Buy). Other stocks worth considering in the space are Lockheed Martin Corp. (LMT), Northrop Grumman Corp. (NOC) and Alliant Techsystems Inc. (ATK). While Lockheed and Alliant Techsystems hold a Zacks Rank #1 (Strong Buy), Northrop Grumman carries a Zacks Rank #2 (Buy).
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