(RTN) Raytheon to Develop Army Radars

Raytheon Company (RTN) has entered into a $45.5 million agreement with the U.S. Army for prototype development of the Ku Band Multi-Function RF System (MFRFS) Sense and Warn (S&W) radars. This agreement is an extension of U.S. Army’s Future Combat Systems (FCS) program. The FCS program is a defense modernization plan adopted by the U.S. Army to increase its operational success and supply improvised and modern ammunition to the armed troops.

The agreement is an extension of an ongoing program carried on by Raytheon to enhance the operation of the Counter Rocket Artillery and Mortar (C-RAM) S&W systems.

Per the terms of the deal, Raytheon will obtain subsystems and long-lead material for Ku Band MFRFS prototype systems, scheduled to be developed in 2012. As a predecessor to the Ku Band MFRFS alternative, Raytheon will utilize the remaining assets from the FCS program to structure, examine and deploy 18 Low Quadrant Elevation (QE) MFRFS C-RAM S&W systems.

The Low QE MFRFS and Ku Band MFRFS systems significantly reduce fake alarms, offer enhanced S&W times, and provide better coverage of fielded C-RAM systems, thus expanding the competencies of the U.S. Army troops.

We believe that Raytheon is well positioned with multi-sector exposure, a strong balance sheet and steady cash flow. The company is focused on achieving strong operational growth and profitability in its core sectors in both the domestic and international markets.

But, at the same time, we are cautious about the U.S. defense budget cutbacks, which might negatively impact several contracts, uncertainties associated with vital project executions and order cancellations.

Raytheon Company currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Waltham, Massachusetts-based Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing, effects, and command, control, communications and intelligence systems, as well as a broad range of mission support services. Raytheon Company’s peers are Lockheed Martin Corporation  (LMT) and Northrop Grumman Corporation (NOC).

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