Raytheon Company RTN has signed an agreement with the Indian Ministry of Defense through the U.S. Department of Defense’s foreign military sales (“FMS”) program to deliver 245 Stinger air-to-air missiles as well as launchers and related engineering support services.
The latest deal forms a part of a wider FMS agreement between India and the U.S., worth $3.1 billion, which includes combat helicopters, weapons, radars and electronic warfare suites.
The Stinger is a lightweight, high-capacity and high-speed surface-to-air missile. It is also capable of being deployed by ground troops and on military platforms. The missile can confront all types of helicopters, UAVs, cruise missiles and fixed-wing aircraft.
The missile, which has recorded over 270 fixed- and rotary-wing intercepts to date, is used in 19 countries. Moreover, it is used by all the four U.S. military services.
The Stinger has been used in four military conflicts — Falklands War, Angolan Civil War, Yugoslav Wars and during the attack of Soviet Union on Afghanistan.
According to Raytheon Land Warfare Systems vice president, Duane Gooden, "India joins nations around the globe who recognize that air-to-air Stinger can be a key component of attack and light attack helicopter mission configurations."
Raytheon is one of the best-positioned large-cap defense players due to its non-platform-centric focus. The company is particularly focused on its overseas business. FMS contracts are a vital growth driver for Raytheon. International sales increased 9% in 2015 and 16% in the fourth quarter. While international bookings comprised 34% of total company bookings in 2015, international backlog was at 43% of the total, compared with 40% at 2014 end.
Zacks Rank & Key Picks
Raytheon currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include HEICO Corporation HEI, AeroVironment, Inc. AVAV and Spirit AeroSystems Holdings, Inc. SPR. While HEICO Corporation sports a Zacks Rank #1 (Strong Buy), AeroVironment and Spirit AeroSystems carry a Zacks Rank #2 (Buy).
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