Raytheon Wins Air Force Contract - Analyst Blog

Raytheon Company (RTN) has been awarded an $886 million U.S. Air Force contract to develop a new aspect of the Global Positioning System (GPS), namely the Advanced Control Segment (OCX), which will improve the accuracy of information from GPS satellites.

 

Raytheon is also tasked to improve anti-jam capabilities and improved security, accuracy and reliability of the system. It will be based on a modern service-oriented architecture to integrate government and industry open-system standards.

 

Raytheon brings more than four decades of high-availability precision satellite command and control systems experience. The company will supervise a team of contractors to make expansions and improvements in accuracy to the GPS system. The team of contractors includes Boeing Company (BA), Braxton Technologies, Infinity Systems Engineering and the Jet Propulsion Laboratory.

 

Raytheon ended fiscal 2009 with an order backlog of $36.9 billion compared to $38.9 billion at the end of fiscal 2008. Funded backlog as of year-end fiscal 2009 stood at $23.5 billion.

 

Raytheon is one of the largest aerospace and defense companies in the U.S. It 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.

 

We continue to view Raytheon as one of the best positioned companies among the large-cap defense primes due to its non-platform-centric focus, strong order bookings and order backlog, healthy cash flow generation and focus on shareholder value. We maintain our market Neutral recommendation on the shares. Defense contractors with significant exposure to high-cost platform programs include Lockheed Martin Corporation (LMT), Northrop Grumman Corporation (NOC) and General Dynamics Corporation (GD).