Raytheon Company’s (RTN - Free Report) Space and Airborne Systems (SAS) business unit recently won a contract for supplying the AN/ALR-69A Digital Radar Warning Receiver System. The deal came under the foreign military sales (FMS) program that would further support its production requirements.
Details of the Deal
The contract is valued at $90 million and has been awarded by the Air Force Life Cycle Management Center, Electronic Warfare, Robins Air Force Base, Georgia. Per the terms, Raytheon will offer fabrication, integration, testing and delivery of line replaceable and shop replaceable units for the radar system.
Work related to the deal will be executed in Goleta, CA and Forest, MS. The entire work is scheduled to be completed by May 2023. Raytheon will utilize Japanese foreign military sales funds to partially finance the task.
A Brief Note on AN/ALR-69A Radar System
Raytheon’s AN/ALR-69A is the world’s first all-digital radar warning receiver that offers situational awareness in an affordable price. The ALR-69A(V) helps in the suppression of enemy air defenses, provides easy cross-platform integration, enhanced spectral and spatial coverage for high-sensitivity detection in dense signal environments. Per Raytheon, the ALR-69A is compatible with virtually any airborne platform.
The upgraded system currently offers aircrews more options with its single-ship geolocation capability, providing them precise information on ground-based threat locations and precision-direction finding for airborne threats.
What’s Favoring Raytheon?
Raytheon’s Space and Airborne Systems (SAS) unit, which manufacture radar warning receivers, highly specializes in developing integrated sensors and communication systems for advanced warfare based missions. Raytheon's Electronic warfare products have been successfully able to earn a worldwide reputation for performance and reliability, over the last five decades.
Over the past few years, Raytheon has witnessed radar related success from major investments including those made in Gallium Nitride (GaN), which helps in amplifying radio energy for radars, jammers and other devices.
Notably, Raytheon’s SAS unit reported first quarter 2018 revenues of $1.57 billion, that inched up a mere 1% year over year. We may expect the latest contract win to add more impetus to this unit’s growth in the second quarter.
Furthermore, President Trump’s fiscal 2019 defense budget proposed includes an investment plan of $13.7 billion in science and technology, which includes electronic warfare technologies as well.
Considering such favorable budgetary revisions, we expect the company to win more such radar related contracts in days ahead.
Raytheon’s stock has improved about 29.3% in the last twelve months, compared with the broader industry’s gain of 27.4%. The outperformance was most likely led by the company’s strong international sales and a robust balance sheet.
Zacks Rank & Key Picks
Raytheon Martin currently carries a Zacks Rank #3 (Hold). A few top-ranked stocks in the same sector are AeroVironment, Inc. (AVAV - Free Report) , L3 Technologies Inc. (LLL - Free Report) and Wesco Aircraft Holdings, Inc. (WAIR - Free Report) . While AeroVironment sports a Zacks Rank #1 (Strong Buy), L3 Technologies and Wesco Aircraft Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AeroVironment recorded an average positive earnings surprise of 147.43% in the last four quarters. The company’s long-term growth rate is pegged at 20%.
L3 Technologies recorded an average positive earnings surprise of 7.42% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 1.9% to $9.64 in the last 90 days.
Wesco Aircraft Holdings long-term growth rate is pegged at 12%. The Zacks Consensus Estimate for 2018 earnings has risen by 10% to 77 cents in the last 90 days.
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