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Raytheon Clinches $304M Navy Contract for Missile Spares
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Raytheon Company has won a contract from the U.S. Navy to procure Tomahawk Block IV All-Up-Round vertical launch system missiles and spares.
Details of the Contract
The contract is valued at $303.7 million. It was awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the contract, Raytheon will procure214 missiles and spares for the Navy and spares for the UK government. It consists of99% purchases for the Navy and the remaining 1% for the UK under the foreign military sales (FMS) program.
Work is scheduled to be complete by Aug 2018. Majority of the work will be carried out in Tucson, AZ, while the rest will be executed in various locations across the U.S. The contract will use fiscal 2015 and 2016 weapons procurement (Navy); and FMS funds.
A Brief Note on Tomahawk Block IV
Tomahawk is a long-range, all-weather,subsoniccruise missilenamed after theNative American axe.Interestingly, the Block IVvariant uses a two-way satellite data-link, which allows it to change course mid-flight to reprogrammed targets.The missiles can be launched from surface ships with aVertical Launch System (VLS) as well as fromsubmarines with a Capsule Launch System (CLS).Note that General Dynamics Corp. (GD - Free Report) has manufactured some of theTomahawk missiles.
Tomahawk has become an important weapon in the U.S. defense arsenal for its precise capability to take out high-value targetsfrom long distances. These missiles have a range of 1,000 nautical miles (1,150 statute miles).
Our View
Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus, as well as its strong order bookings and order backlog of more than $35.81 billion at the end of the third quarter of 2016.
Revenue and earnings growth continue to be driven by its strong presence in the areas of Intelligence, Surveillance and Reconnaissance (ISR); air & missile defense systems; border security; air traffic management; training and homeland security; and cyber security. Meanwhile, its non-platform centric business model insulates it from cancellation or deferral of any specific platform programs.
Price Movement
Raytheon’s stock has gained about 12.8% in the last one year, underperforming the Zacks Categorized Aerospace-Defense Equipment industry’s gain of 14.6%. This could be because Raytheon’s dependence on the U.S. government for military contracts and tough competition are putting pressure on its stock price. The company has also put up a weak show in comparison to other major players in the same space like Ducommun Inc. (DCO - Free Report) andSpirit AeroSystems Holdings, Inc. (SPR - Free Report) , all of which have outperformed the industry.
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Raytheon Clinches $304M Navy Contract for Missile Spares
Raytheon Company has won a contract from the U.S. Navy to procure Tomahawk Block IV All-Up-Round vertical launch system missiles and spares.
Details of the Contract
The contract is valued at $303.7 million. It was awarded by the Naval Air Systems Command, Patuxent River, MD.
Per the contract, Raytheon will procure214 missiles and spares for the Navy and spares for the UK government. It consists of99% purchases for the Navy and the remaining 1% for the UK under the foreign military sales (FMS) program.
Work is scheduled to be complete by Aug 2018. Majority of the work will be carried out in Tucson, AZ, while the rest will be executed in various locations across the U.S. The contract will use fiscal 2015 and 2016 weapons procurement (Navy); and FMS funds.
A Brief Note on Tomahawk Block IV
Tomahawk is a long-range, all-weather,subsoniccruise missilenamed after theNative American axe.Interestingly, the Block IVvariant uses a two-way satellite data-link, which allows it to change course mid-flight to reprogrammed targets.The missiles can be launched from surface ships with aVertical Launch System (VLS) as well as fromsubmarines with a Capsule Launch System (CLS).Note that General Dynamics Corp. (GD - Free Report) has manufactured some of theTomahawk missiles.
Tomahawk has become an important weapon in the U.S. defense arsenal for its precise capability to take out high-value targetsfrom long distances. These missiles have a range of 1,000 nautical miles (1,150 statute miles).
Our View
Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus, as well as its strong order bookings and order backlog of more than $35.81 billion at the end of the third quarter of 2016.
Revenue and earnings growth continue to be driven by its strong presence in the areas of Intelligence, Surveillance and Reconnaissance (ISR); air & missile defense systems; border security; air traffic management; training and homeland security; and cyber security. Meanwhile, its non-platform centric business model insulates it from cancellation or deferral of any specific platform programs.
Price Movement
Raytheon’s stock has gained about 12.8% in the last one year, underperforming the Zacks Categorized Aerospace-Defense Equipment industry’s gain of 14.6%. This could be because Raytheon’s dependence on the U.S. government for military contracts and tough competition are putting pressure on its stock price. The company has also put up a weak show in comparison to other major players in the same space like Ducommun Inc. (DCO - Free Report) andSpirit AeroSystems Holdings, Inc. (SPR - Free Report) , all of which have outperformed the industry.
Zacks Rank
Raytheon currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>