RTN Gets JTT-Sr Radios Contract

Raytheon Company (RTN - Analyst Report) has received a production contract modification worth $8.7 million from the U.S Navy for the supply of Joint Tactical Terminal Senior (JTT-Sr) radios.

JTT-Sr is one of the first fielded multi-channel, multi-waveform software-defined radios that provide critical communication link. These radios are suitable for the new Common Interactive Broadcast (“CIB”) waveform and enclose the latest security, hardware and software enhancements.

The JTT-Sr radios have the capability to receive threat data rapidly from a variety of national and tactical sensors to joint service host platforms. The information, circulated over Integrated Broadcast Service (“IBS”) networks, provides surveillance reports and tracks theater-based tactical situational awareness needs. Moreover, the radios provide critical ballistic missile defense support to relay missile detection warnings.

The JTT-Sr demonstrates the long legacy of intelligence dissemination terminals that the company has been providing to the military for more than 25 years. Recently, the company had also upgraded the JTT-Sr needed to meet new security requirements and slot in the next generation communication waveform at its Largo, Florida facility.

Recently, the company had also received a $125.3 million contract for modernizing and adding new competence power to an Air Force early warning radar (“EWR”) system from The Missile Defense Agency (“MDA”) and the U.S. Air Force. Early warning radar is high-powered mission-critical and large phased-array radar. Post up gradation, the EWR will be targeting data that can be used to shoot down incoming ballistic missiles, besides providing early warning of missile launches and space surveillance.

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.

Going forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow and operational improvements. We expect future growth to be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and Terminal High Altitude Area Defense.

This is, however, offset by apprehensions over the future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations.

The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. Some of its main competitors are L-3 Communications Holdings Inc. (LLL - Analyst Report) and FLIR Systems, Inc. (FLIR - Analyst Report).