Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Raytheon Company (RTN - Analyst Report) has received an international order worth $106 million for its Paveway II smart bombs.  Per this direct commercial sale contract, the company will provide Paveway kits for both GBU-12 (500lb) and GBU-58 (250lb) guided bombs.

Paveway is a kit designed by Raytheon and provides warfighter accuracy and standoff capability that has revolutionized tactical air-to-ground warfare by converting dumb bombs into precision-guided munitions. Bombs equipped with Paveway kits have been tested and proven in every major conflict in which it has been used.

The improved version of Paveway includes Global Positioning System (“GPS”)/Inertial Navigation System guidance capabilities. The new version is a combination of precision and flexibility of traditional laser-guided weapons and all-weather capability of Inertial Navigation System guidance. The old and new versions put together evolves into a weapon that enhances the mission success rate while lowering the requisite sortie count and weapon inventory.

In Nov 2012, the company had received a contract worth $422 million for its combat-proven Paveway II family of precision-guided munitions. The contract was under a direct commercial sale from an international customer.

Raytheon is one of the best-positioned companies among the large-cap defense players. The company competes with Lockheed Martin Corporation (LMT - Analyst Report) for the supply of laser guided bombs to customers.  Raytheon has been meeting the needs of the U.S. armed forces as well as allied nations with its Paveway line-up of bombs.

Recently, Raytheon received a contract from the U.S. Air Force to provide up to 18 Deployable Radar Approach Control systems. The contract will likely be worth $260 million though Raytheon has been authorized $50.6 million for the early development stage of the D-RAPCON units.

Going forward, revenue and earnings growth would continue to be driven by its strong presence in the areas of Intelligence, Surveillance and Reconnaissance; air & missile defense systems; border security; air traffic management; training and homeland security; and cyber security.

However, we are concerned about the uncertainty stemming from the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks Rank #3 (Hold).

However, stocks worth considering in the defense space are B/E Aerospace Inc. (BEAV - Snapshot Report) and Alliant Techsystems Inc. (ATK - Analyst Report), both with a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%