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Raytheon Wins $72M Deal for Aegis FCS Equipment Production

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Raytheon Company’s Integrated Defense Systems (IDS) business division recently secured a $72.5-million contract for the production of Fire control system (FSC) MK 99 equipment for the Advanced Electronic Guidance and Instrumentation System (Aegis) Weapon System along with other associated engineering services. The deal was awarded by the Naval Sea Systems Command, Washington, DC.

Work related to the deal will be majorly executed in Andover, MA, while the remaining work will be carried out in Marlborough, MA, and Chesapeake, VA, along with various other locations across the United States. The entire task is expected to get completed by April 2022.

A Brief Note on AEGIS and FCS MK 99

Aegis is an integrated missile guidance system used by U.S. Navy and allied ships to shield the fleet against aircraft, cruise missiles and ballistic missiles. It is also capable of simultaneously launching attacks on land targets, submarines and surface ships.

The FCS MK-99 is a major component of the AEGIS Combat System, which controls the loading, arming and launching of the selected weapon, and provides terminal guidance for Anti-aircraft warfare (AAW) missiles. FCS controls the continuous wave illuminating radar with a very high probability of kill. The MK-99 FCS also controls the target illumination for the terminal guidance of Ship Launched SM-2 Anti-Air Missiles.

What Favors Raytheon?

Increasing geo-political tensions across the globe have prompted nations to strengthen their arsenal with technologically advanced missile defense systems. To this end, Raytheon’s advanced IDS segment has been clinching pivotal contracts from the United States and overseas customers, owing to its high-end, missile defense systems.

Furthermore, Raytheon’s IDS segment also benefits from providing product modernization requirements, engineering services and other technical assistance for the Aegis Combat System. Notably, the company benefits a great deal from the Aegis system’s strong demand worldwide.

Price Movement

Raytheon’s stock has lost 20.4% in the past 12 months compared with the industry’s decline of 9.6%. The underperformance may have been caused by the tough competition the company faces in the defense market.



Zacks Rank & Other Stocks to Consider

Raytheon currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are Aerojet Rocketdyne Holdings , Teledyne Technologies Incorporated (TDY - Free Report) and The Boeing Company (BA - Free Report) .

While Aerojet Rocketdyne and Teledyne Technologies sport a Zacks Rank #1 (Strong Buy), Boeing carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aerojet Rocketdyne came up with average positive earnings surprise of 19.27% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 43.3% to $1.82 in the past 90 days.

Teledyne Technologies came up with average positive earnings surprise of 12.92% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has increased 6% to $8.75 in the past 90 days.

Boeing delivered average positive earnings surprise of 28.01% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has moved up 3% to $15.05 in the past 90 days.

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