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Defense contractor Raytheon Company ( RTN - Analyst Report ) announced that it received a $338 million contract from the U.S. Navy to produce the Tomahawk Block IV tactical cruise missile. The new missiles will replenish the used Tomahawks in Operation ODYSSEY DAWN in Libya and fulfill the government's requirement in fiscal year 2012.
Tomahawk has become an important weapon in the U.S. defense arsenal for its precise capability to take out high value target from a very long distance. These missiles have a range of 1,000 nautical miles (1,150 statute miles) and can be launched both from surface and submarines.
The new Tomahawk missiles have developed over the years. Presently Tomahawk Block IV employs a two-way satellite datalink. This feature provides more flexibility to the missiles, allowing them to change its course and circle over the battlefield to neutralize a far more critical target. Till date, the U.S. Army has used more than 2,000 Tomahawks in combat helping it gain an edge over its opponents in its international missions.
Per the current contact with the Navy Raytheon will supply the missiles and also provide warranties, flight test and life-cycle support. Raytheon’s Missile Systems' Air Warfare Systems produces the Tomahawks. The first quarter 2012 sales of this segment were higher year over year primarily due to Excalibur sales.
Missile Systems contributes substantially to Raytheon’s yearly revenue. The company expects 2012 revenue to be between $24.5 billion and $25 billion with $5.5 billion to $5.7 billion expected to come from Missile Systems. We believe the increasing utilization of advance missiles by the U.S. Army and its allies has contributed to the success of this division.
Raytheon Company presently retains a short-term Zacks #3 Rank, which translates into a Hold rating. Its peer, Northrop Grumman Corporation ( NOC - Analyst Report ) , presently holds a short term Zacks #2 (Buy rating).
Based in Massachusetts, Raytheon Company deals with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.
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