Raytheon Company (RTN) won a foreign military sales contract from the U.S. Air Force for the design and implementation of an Air and Missile Defense Operation Center (“ADOC”) for Qatar.
The contract value is $75.6 million and the procurement is in response to the Armed Forces Modernization and recapitalization efforts declared by Qatar in Mar 2014.
Qatar will benefit tremendously from the proposed ADOC. It will not only provide Qatar with the Advanced Integrated Air and Missile Defense (“IAMD”) Command and Control System, but also consolidate U.S. air defense systems like the Patriot with that of European air defense systems and radars. The ADOC will also integrate with Qatar’s Air Operations Center (“AOC”) developed by Raytheon.
The center will house the latest command and control, cyber and information assurance abilities, and partner with the U.S. Air Force to enhance security in the region.
Of late, Qatar has been beefing up its defense in light of the growing threat from Iran. In fact, it was looking for an opportunity to develop a regional missile defense system, which would integrate the Patriot systems. Qatar had also inked deals with the U.S. and Germany worth about $3.2 billion in 2013 in an effort to strengthen its arsenal.
With Qatar stepping up its defenses, Raytheon also stands to make huge gains, going forward. Raytheon expects to close a $2 billion Patriot Missile Defense systems deal with Qatar by 2014 end.
The company aims to achieve total bookings of nearly $23.5 billion in 2014. Contributions from foreign defense contracts are expected to touch 30% of the total revenue in 2014 and are expected to be a vital growth driver for Raytheon.
Raytheon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the defense sector include Rockwell Collins Inc. (COL), General Dynamics Corp. (GD) and Engility Holdings, Inc. (EGL). All these stocks carry a Zacks Rank #2 (Buy).
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