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Raytheon Wins $127M Army Deal for Excalibur Projectiles
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Defense equipments manufacturer Raytheon Company’s business segment, Missile Systems, recently secured a modification contract for procuring Excalibur Precision 155-mm Projectiles. Work related to this deal is expected to be over by Apr 30, 2019.
Valued at $127.1 million, the contract was awarded by the U.S. Army Contracting Command, Picatinny Arsenal, NJ. Work will be carried out at various locations across the United States, U.K. as well as Karlskoga, Sweden. The company will utilize fiscal 2015 and 2017 other procurement (Army) funds to complete the task.
A Brief Note on Excalibur Projectiles
Raytheon’s Excalibur is a precision guided extended range artillery projectile. Unlike “near precision” guidance systems, the Excalibur weapon provides accurate first-round effects at all ranges in all weather conditions. Per Raytheon’s management, the Excalibur projectile’s precision along with its ability to be integrated on multiple gun systems, enables both the United States and its allies to provide overmatch capabilities against land targets in a variety of combat environments. Excalibur is also highly resistant to Global Positioning System (GPS) jamming.
This arsenal has a strong demand in the overseas market. Evidently, Sweden, Canada, Australia and the Netherlands have chosen Raytheon’s Excalibur precision-guided projectile to address vital security interests and several other international partners are finalizing procurement plans.
Our View
With the increase in cyber-attacks, terrorism threats and geopolitical instability, there is an immediate need of all countries to elevate their level of security and defense. Major defense contractors in the nation like Raytheon, AeroVironment, Inc. (AVAV - Free Report) , Orbital ATK, Inc. , Rockwell Collins, Inc. are putting their best to make most of this opportunity and expand their business worldwide.
In particular, Raytheon’s advanced Missile Systems segment has been clinching significant awards from the United States as well as international customers, courtesy of its high-end, combat-proven arsenals. To this end, last month, the company won a $614.5 million worth modification contract from the Missile Defense Agency for manufacturing 17 Standard Missile-3 (SM-3) Block IIA missiles.
With respect to the Excalibur projectile, Raytheon is currently developing a laser-guided version of the projectile — Excalibur S. This variant incorporates a digital semi-active laser seeker, which enables it to strike moving targets without precise location information. It also reduces the risk associated with GPS jamming. We expect the launch of this advanced variant to fetch higher profit for the Missile Systems segment.
Based on the 11% sales growth that this unit witnessed in the second quarter of 2017 and similar strong performance anticipated ahead, the company expects to see improved operating margin for this business in the second half of 2017. We believe the recently won award along with similar ones anticipated in the near future will enable the company to achieve the target of its missile business growth.
Price Performance
Raytheon’s stock has returned 32.7% over the last year, underperforming the 37.9% rally of the industry it belongs to. This might have been caused by the earlier budget cuts inflicted by the U.S. government.
Cyberattacks have become more frequent and destructive than ever. In fact, they’re expected to cause $6 trillion per year in damage by 2020.
The cybersecurity industry is expanding quickly in response to these threats. In fact, a projected $170 billion per year will be spent to protect consumer and corporate assets. Zacks has just released Cybersecurity: An Investor’s Guide to Locking Down Profits which reveals 4 promising investment candidates.
Image: Bigstock
Raytheon Wins $127M Army Deal for Excalibur Projectiles
Defense equipments manufacturer Raytheon Company’s business segment, Missile Systems, recently secured a modification contract for procuring Excalibur Precision 155-mm Projectiles. Work related to this deal is expected to be over by Apr 30, 2019.
Valued at $127.1 million, the contract was awarded by the U.S. Army Contracting Command, Picatinny Arsenal, NJ. Work will be carried out at various locations across the United States, U.K. as well as Karlskoga, Sweden. The company will utilize fiscal 2015 and 2017 other procurement (Army) funds to complete the task.
A Brief Note on Excalibur Projectiles
Raytheon’s Excalibur is a precision guided extended range artillery projectile. Unlike “near precision” guidance systems, the Excalibur weapon provides accurate first-round effects at all ranges in all weather conditions. Per Raytheon’s management, the Excalibur projectile’s precision along with its ability to be integrated on multiple gun systems, enables both the United States and its allies to provide overmatch capabilities against land targets in a variety of combat environments. Excalibur is also highly resistant to Global Positioning System (GPS) jamming.
This arsenal has a strong demand in the overseas market. Evidently, Sweden, Canada, Australia and the Netherlands have chosen Raytheon’s Excalibur precision-guided projectile to address vital security interests and several other international partners are finalizing procurement plans.
Our View
With the increase in cyber-attacks, terrorism threats and geopolitical instability, there is an immediate need of all countries to elevate their level of security and defense. Major defense contractors in the nation like Raytheon, AeroVironment, Inc. (AVAV - Free Report) , Orbital ATK, Inc. , Rockwell Collins, Inc. are putting their best to make most of this opportunity and expand their business worldwide.
In particular, Raytheon’s advanced Missile Systems segment has been clinching significant awards from the United States as well as international customers, courtesy of its high-end, combat-proven arsenals. To this end, last month, the company won a $614.5 million worth modification contract from the Missile Defense Agency for manufacturing 17 Standard Missile-3 (SM-3) Block IIA missiles.
With respect to the Excalibur projectile, Raytheon is currently developing a laser-guided version of the projectile — Excalibur S. This variant incorporates a digital semi-active laser seeker, which enables it to strike moving targets without precise location information. It also reduces the risk associated with GPS jamming. We expect the launch of this advanced variant to fetch higher profit for the Missile Systems segment.
Based on the 11% sales growth that this unit witnessed in the second quarter of 2017 and similar strong performance anticipated ahead, the company expects to see improved operating margin for this business in the second half of 2017. We believe the recently won award along with similar ones anticipated in the near future will enable the company to achieve the target of its missile business growth.
Price Performance
Raytheon’s stock has returned 32.7% over the last year, underperforming the 37.9% rally of the industry it belongs to. This might have been caused by the earlier budget cuts inflicted by the U.S. government.
Zacks Rank
Raytheon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
New Report: An Investor’s Guide to Cybersecurity
Cyberattacks have become more frequent and destructive than ever. In fact, they’re expected to cause $6 trillion per year in damage by 2020.
The cybersecurity industry is expanding quickly in response to these threats. In fact, a projected $170 billion per year will be spent to protect consumer and corporate assets. Zacks has just released Cybersecurity: An Investor’s Guide to Locking Down Profits which reveals 4 promising investment candidates.
Download the new report now>>