Raytheon UK, an affiliate of Raytheon Company (RTN), received an award from the Royal Netherlands Air Force (“RNLAF”) to upgrade four additional Airport Surveillance Radar sites.
This latest award − the value of which was not disclosed − follows Raytheon's successful implementation of the first Wind Farm Mitigation upgrade at Dutch Air Force's Woensdrecht Air Base. The upgrade is scheduled to be completed within 12-15 months and comprises enhanced technology such as WiMax interference filtering for discriminating the actual targets from the false ones that are caused by the blades of wind turbines at wind farms.
Extensive research and development for about three years has led to a thorough modernization of the air traffic control radar system. This advanced technology aims to alleviate the adverse effects on radar performance caused by wind turbines.
The Mass. based aerospace and defense contractor, Raytheon now remains upbeat following its success in the Netherlands. The company is in talks with customers in Europe, the U.S. and Canada for the utilization of this pack of mitigation solutions.
Raytheon is one of the best-positioned companies among the large-cap defense players, such as, Northrop Grumman Corp. (NOC), Lockheed Martin Corporation (LMT) and General Dynamics Corporation (GD), owing to its non-platform-centric focus. Again, rising international sales, substantial presence in the classified market, strong order bookings and order backlog, strong cash flow generation and focus on shareholder value are added incentives.
In fact, Raytheon draws a significant portion of its revenue from international sales, more than any other major U.S. weapons maker. The company expects a 20% surge in international bookings this year.
However, we remain concerned about apprehensions over the future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations.
Raytheon retains a Zacks Rank #3 (Hold), implying that it is expected to trade in line with the broader U.S. equity market over the next one to three months.
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