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The U.S. Air Force has awarded Computer Sciences Raytheon, a joint venture of Raytheon Company (RTN - Analyst Report) and Computer Sciences Corporation (CSC - Analyst Report), an $82.1 million contract to provide operations, maintenance and sustainment of critical range and launch processing systems. Under the contract, services will be procured to support the launch processing mission of the 45th Space Wing.

The 45th Space Wing is a United States Air Force unit. It is assigned to the Fourteenth Air Force, stationed at Patrick Air Force Base, Florida. It commands Patrick Air Force Base and the Cape Canaveral Air Force Station. The mission of the 45th Space Wing is to assure access to the high frontier and to support global operations. The wing currently operates a number of rockets and missiles, including the active expendable launch systems – Delta IV and Atlas V. The 45th Space Wing also provides support for the Department of Defense, NASA, and commercial manned and unmanned space programs.
 
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 $33.9 billion at the end of the first half of 2012.

Earlier, in second quarter 2012, Raytheon’s earnings from continuing operations were $1.41 per share compared with $1.20 per share in the prior-year quarter. This was driven by operational improvements and capital deployment events. Reported earnings surpassed the Zacks Consensus Estimate of $1.21 per share. Revenue was $5.99 billion, down 3.4% year over year from $6.20 billion in the year-ago period. Quarterly revenue missed the Zacks Consensus Estimate by $30 million.

In its earnings press release, Raytheon increased its 2012 earnings guidance to a range of $5.70–$5.85 per share from its previous expectation of $5.55–$5.70 per share. On the other hand, the company maintained its sales guidance in a range of $24.5–$25 billion for 2012.

Revenue and earnings growth continue to be driven by a strong presence in the areas of Intelligence, Surveillance and Reconnaissance; air & missile defense systems; border security; air traffic management; training and homeland security; and cyber security. Also, its non-platform centric focus insulates it from cancellation or deferral of any specific platform programs.

Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, and growing cash flow, besides operational improvements. Future growth will be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD.

This is, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. Thus, over the longer run, we maintain our long-term Neutral recommendation on the stock. The company presently retains a short-term Zacks #3 Rank (Hold).

Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S., 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. The company mainly competes with L-3 Communications Holdings Inc. (LLL - Analyst Report) and FLIR Systems Inc. (FLIR - Analyst Report).

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