Raytheon Co. RTN stood out on Pentagon’s daily funding list on Friday, Sep 25, 2015 securing as many as five contracts for a cumulative $545.5 million. Raytheon Missile Systems alone clinched three of the five contracts.
Based in Tucson, AZ Raytheon Missile Systems won a major award from the U.S. Navy for $264.8 million. The contract involves improvements to the AIM-9X air-to-air missile, for the U.S. Air Force, Navy and six foreign military sales (“FMS”) clients, namely, Korea, Singapore, Malaysia, Belgium, the Netherlands and Turkey.
The contract calls for Raytheon to carry out engineering services required to incorporate new AIM-9X missile components and associated software updates into the Lot 17 and Lot 19 production programs. Additionally, it will also provide development, integration and flight test support for AIM-9X Block II hardware and software. The contract is expected to run through Sep 2020.
Another contract, worth $227 million, requires Raytheon’s Missile Systems division to produce 447 AIM-9X missiles. Essentially a modification contract, the missiles are headed for the U.S. Navy, Air Force and four FMS customers (Japan, Korea, Romania and Israel).
In addition, the contract covers the delivery of 129 training missiles, which are scheduled for delivery to various governments, including those of Switzerland, Morocco, Israel and Oman. The work is expected to be completed in Dec 2017.
Raytheon also won a $15.4 million contract modification under which it will procure critical SM-6 components going obsolete, necessary for future production orders. Raytheon has also been awarded contracts worth $26.9 million and $11.4 million. While the former contract is for combined crypto modernization Phase 1 and spares supporting the Patriot system, the latter is for procurement of additional second generation forward looking infrared hardware and support services for preservation of the Army’s industrial base for these sensors.
Foreign military contracts continue to be the vital growth driver for Raytheon in a mature U.S. market. The company’s international bookings were particularly strong in the second quarter, representing 44% of the total.
Based in Massachusetts, Raytheon 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.
Raytheon holds a Zacks Rank #2 (Buy). Other well-placed stocks in the industry are LMI Aerospace Inc. LMIA, sporting a Zacks Rank #1 (Strong Buy) and Spirit AeroSystems Holdings, Inc. SPR and Orbital ATK OA, carrying a Zacks Rank #2 (Buy).
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