Back to top

Analyst Blog

Raytheon Company (RTN - Analyst Report) has received a contract worth $422 million for its combat-proven Paveway II family of precision-guided munitions. The contract was under a direct commercial sale from an international customer.

Paveway provides warfighter unparalleled accuracy and standoff capability that has revolutionized tactical air-to-ground warfare by converting dumb bombs into precision-guided munitions. Bombs equipped with Paveway kits have been tested and proven in every major conflict in which it has been used.

The new version of Paveway includes Global Positioning System (“GPS”)/Inertial Navigation System guidance capabilities. The new version is a combination of precision and flexibility of traditional laser-guided weapons and all-weather capability of Inertial Navigation System guidance. The old and new version put together evolves into a weapon that enhances the mission success rate while lowering the requisite sortie count and weapon inventory.

Raytheon has been meeting the needs of the U.S. armed forces as well as allied nations with its Paveway. In April this year, Raytheon had received a replenishment contract for Paveway IV from UK Ministry of Defense (“MOD”). Paveway IV is the latest generation GPS precision-guided munition.

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.

Raytheon’s order backlog is greatly diversified, consisting of more than 15,000 contracts. Recently, Raytheon received a contract to deliver a Command, Control, Communications, Computers and Intelligence (“C4I”) system to the Kingdom of Saudi Arabia. The contract valued in excess of $600 million and was awarded as a direct commercial sale by the Saudi Ministry of Defense.

Going forward, revenue and earnings growth would continue to be driven by its strong presence in the areas of Intelligence, Surveillance and Reconnaissance (“ISR”); air & missile defense systems; border security; air traffic management; training and homeland security; and cyber security.

However, we remain concerned due to 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.

Raytheon’s defense peers that are also facing the risk of defense budget cuts are L-3 Communications Holdings Inc. (LLL - Analyst Report) and Lockheed Martin Corporation (LMT - Analyst Report).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%