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Raytheon Wins $25M Navy Deal to Support AEGIS Modernization
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Defense behemoth, Raytheon Company has secured a contract in relation to a previously awarded delivery order for supplying production requirements associated with Advanced Electronic Guidance and Instrumentation System (AEGIS) modernization. Work for this deal is scheduled to be over by Dec 2019.
Details of the Deal
Valued at $25.2 million, the new contract was awarded by the Naval Sea Systems Command, Washington, D.C. However, the cumulative value of this contract can reach $36.5 million on exercise of options included in this order.
Per the terms, Raytheon will manufacture Solid State Switch Assembly (SSSA) Ordnance Alteration kits and spares, as well as test and installation efforts to support the AEGIS Modernization (AMOD) program. Majority of the work will be carried out in Andover and Marlborough, MA. The contractor will utilize fiscal 2016 and 2017 other procurement (Navy) funds to complete the work.
What’s AEGIS & AMOD?
AEGIS is an integrated missile guidance system – primarily manufactured by Lockheed Martin Corp. (LMT - Free Report) . It is used on U.S. Navy and allied ships to protect the battle group. Aegis Ballistic Missile Defense (ABMD) is the world’s only maritime Ballistic Missile Defense System (BMDS), which can simultaneously attack land targets, submarines and surface ships while protecting the fleet against aircraft, cruise missiles and ballistic missiles.
The AMOD program includes combat system upgrades that enhance the anti-air warfare and ballistic missile defense capabilities of AEGIS equipped DDG 51 Arleigh Burke-class destroyers and CG 47 Ticonderoga-class warships.
Since AEGIS’ inception, Raytheon has been the designated manufacturer of two of its notable components – the SPY-1D (V) high-powered radar Transmitter that tracks and guides missile functions and the MK 99 Fire Control System that communicates with the missile control station.
Our View
Raytheon’s Integrated Defense Systems (IDS) segment is one of the leading suppliers of large land- and sea-based radar solutions. Moreover, the company offers the next generation of Gallium Nitride (GaN)-based naval radars, including air and missile defense radar as well as enterprise air surveillance radar for the U.S. Navy and international customers.
With President Trump long being a supporter of increased defense spending, the budgetary scenario is currently in favor of defense biggies like Raytheon. To this end, the fiscal 2017 budget appropriation proposed by Trump in March this year included investment proposal worth $13.5 billion. The funds would be utilized in procuring a handful of defense equipment that include tactical missiles and Lockheed’s Terminal High Altitude Area Defense interceptors.
These new opportunities may have led the company to raise its bookings outlook for the year by $500 million. More such contracts in the days to come will no doubt further boost the bookings of the company.
Price Movement
Raytheon’s stock is up 14.5% on a year-to-date basis, outperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain of 10.2%. This could be because of rising demand for its defense equipment from the Middle East and North Africa region (MENA) and growth in foreign military sales (FMS) contracts. Additionally, the company poses strong competition for its peers, including Ducommun Incorporated (DCO - Free Report) and Triumph Group, Inc. (TGI - Free Report) .
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
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Raytheon Wins $25M Navy Deal to Support AEGIS Modernization
Defense behemoth, Raytheon Company has secured a contract in relation to a previously awarded delivery order for supplying production requirements associated with Advanced Electronic Guidance and Instrumentation System (AEGIS) modernization. Work for this deal is scheduled to be over by Dec 2019.
Details of the Deal
Valued at $25.2 million, the new contract was awarded by the Naval Sea Systems Command, Washington, D.C. However, the cumulative value of this contract can reach $36.5 million on exercise of options included in this order.
Per the terms, Raytheon will manufacture Solid State Switch Assembly (SSSA) Ordnance Alteration kits and spares, as well as test and installation efforts to support the AEGIS Modernization (AMOD) program. Majority of the work will be carried out in Andover and Marlborough, MA. The contractor will utilize fiscal 2016 and 2017 other procurement (Navy) funds to complete the work.
What’s AEGIS & AMOD?
AEGIS is an integrated missile guidance system – primarily manufactured by Lockheed Martin Corp. (LMT - Free Report) . It is used on U.S. Navy and allied ships to protect the battle group. Aegis Ballistic Missile Defense (ABMD) is the world’s only maritime Ballistic Missile Defense System (BMDS), which can simultaneously attack land targets, submarines and surface ships while protecting the fleet against aircraft, cruise missiles and ballistic missiles.
The AMOD program includes combat system upgrades that enhance the anti-air warfare and ballistic missile defense capabilities of AEGIS equipped DDG 51 Arleigh Burke-class destroyers and CG 47 Ticonderoga-class warships.
Since AEGIS’ inception, Raytheon has been the designated manufacturer of two of its notable components – the SPY-1D (V) high-powered radar Transmitter that tracks and guides missile functions and the MK 99 Fire Control System that communicates with the missile control station.
Our View
Raytheon’s Integrated Defense Systems (IDS) segment is one of the leading suppliers of large land- and sea-based radar solutions. Moreover, the company offers the next generation of Gallium Nitride (GaN)-based naval radars, including air and missile defense radar as well as enterprise air surveillance radar for the U.S. Navy and international customers.
With President Trump long being a supporter of increased defense spending, the budgetary scenario is currently in favor of defense biggies like Raytheon. To this end, the fiscal 2017 budget appropriation proposed by Trump in March this year included investment proposal worth $13.5 billion. The funds would be utilized in procuring a handful of defense equipment that include tactical missiles and Lockheed’s Terminal High Altitude Area Defense interceptors.
These new opportunities may have led the company to raise its bookings outlook for the year by $500 million. More such contracts in the days to come will no doubt further boost the bookings of the company.
Price Movement
Raytheon’s stock is up 14.5% on a year-to-date basis, outperforming the Zacks categorized Aerospace-Defense Equipment industry’s gain of 10.2%. This could be because of rising demand for its defense equipment from the Middle East and North Africa region (MENA) and growth in foreign military sales (FMS) contracts. Additionally, the company poses strong competition for its peers, including Ducommun Incorporated (DCO - Free Report) and Triumph Group, Inc. (TGI - Free Report) .
Zacks Rank
Raytheon currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>