Raytheon Wins Contract For Developing SubHDR Antenna Systems

Raytheon Co. (NYSE:RTN) recently secured a $25.8-million modification contract for developing six Submarine High Data Rate (SubHDR) antenna systems.

Details of the Deal

The contract was awarded by the Space and Naval Warfare Systems Command, San Diego, CA. Majority of the work will be carried out in Largo, FL; Marlborough, MA and the rest will be executed in different locations across the United States.

Raytheon will utilize foreign military sales funds to complete the task. Work related to the deal is scheduled to be completed by Nov 30, 2019. The contract combines purchases for the U.S. Navy, Government of United Kingdom and Australia, under the Foreign Military Sales program. Notably, the cumulative value of the contract may go up to $114.7 million, if the options included in the contract are exercised.

Brief Note on SubHDR Antenna Systems

The Submarine High Data Rate (SubHDR) antenna system is a multi-band satellite communication (SATCOM) system being installed in U.S. nuclear-powered attack submarines. The system consists of a mast-mounted antenna that can be deployed by raising it above the ocean's surface while the submarine remains submerged and stealthy at periscope depth. It is used to provide submarines with high capacity communications in extremely high frequency and super-high frequency bands and enables reception of the global broadcast service. Raytheon’s Space and Airborne System unit designs and develops the SATCOM system.

Our View

The company’s Space and Airborne Systems registered $4,760 million of net sales in the nine months ended September 2017, compared with the year-ago figure of $4,582 million. We believe rising demand for integrated sensors and communication systems along with the procurement of big contracts like the latest one will help the company achieve its raised sales target.

Price Movement

Raytheon’s share price has moved up about 31.7% in a year compared with the broader industry’s gain of 28.8%.

The outperformance was primarily led by strong international sales, a robust balance sheet and frequent acquisitions.

Zacks Rank & Key Picks

Raytheon carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the Aerospace sector are Curtiss-Wright Corporation (NYSE:CW) , Leidos Holdings, Inc. (NYSE:LDOS) and Huntington Ingalls Industries, Inc. (NYSE:HII) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Curtiss-Wright delivered an average positive earnings surprise of 11.78% in the past four quarters. The Zacks Consensus Estimate for current-quarter earnings rose 1.28% to $4.75 in the last 60 days.

Leidos Holdings pulled off an average positive earnings surprise of 14.81% for the past four quarters. The Zacks Consensus Estimate for current-year earnings has increased 4.22% to $3.70 in the past 60 days.

Huntington Ingalls delivered an average positive earnings surprise of 14.22% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has risen 4.85% to $12.09 in the last 60 days.

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