Raytheon Wins Navy Contract

Aerospace and defense operator Raytheon Company (RTN - Analyst Report) announced that it has received a contract worth $56 million from the U.S. Navy to supply sonar equipment. The sonar technology is used primarily by Navy submarines, planes and ships to detect enemy vessels, and also for effective communication and navigation.

Raytheon’s integrated defense unit in Portsmouth, Rhode Island, received the contract from the Defense Logistics Agency to supply the equipment. Raytheon is likely to deliver by March 31, 2014.

Raytheon had previously supplied sonar equipment to the U.S. Navy. On August 2, 2010, Raytheon agreed to partner with the U.S. Navy and Royal Australian Navy to use the sonar technology for Mk-48 torpedo in navy submarines of both countries. In October 2009, the company supplied AN/AQS-22 Airborne Low Frequency Sonar, an undersea warfare sensor for the U.S. Navy's MH-60R multi-mission helicopter, worth $81.1 million.

Raytheon’s outlook largely depends on the order it receives from the defense departments. During the current month the company has received quite a few orders from the defense departments; significant among them are a $90 million contract to provide support for the Battle Command Sustainment Support System (BCS3) and a $450 million contract from the U.S. Air Force to engineer and manufacture  SDB II, which is an air-launched, precision-strike standoff weapon. 

The major peers of the company are The Boeing Company (BA - Analyst Report), Lockheed Martin Corporation (LMT - Analyst Report) and Northrop Grumman Corporation (NOC - Analyst Report). On a competitive landscape the operating margins of Raytheon fared better than its peers in the trailing twelve months.

Raytheon currently retains a Zacks #3 Rank (short-term Hold rating). Given our apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs and risks related to key projects execution, we presently maintain a Neutral rating on the stock.

Read the full analyst report on RTN

Read the full analyst report on BA

Read the full analyst report on LMT

Read the full analyst report on NOC