Raytheon Wins $291.8M Modification Deal For AIM-9X Block II

Raytheon Company’s (NYSE:RTN) Tucson, AZ-based Missile Systems division has won a modification contract worth $291.8 million for the procurement of AIM-9X Block II Missiles.

Details of the Contract

Per the contract, Raytheon will deliver 660 AIM-9X Block II All Up Round tactical full rate production Lot 16 Missiles for the U.S. Navy, Air Force and Army, as well as the governments of Japan, Norway and Taiwan.

Out of the total 660 orders, 596 missiles will be procured for the U.S. government while the rest is allocated for allied customers.

The modification also pertains to the procurement of 252 Block II Captive Air Training Missiles and other items for the U.S. and foreign governments.

Work is scheduled to be complete by Mar, 2019. The company will carry out 43.7% of the work in Tucson. The contract will use fiscal 2016 procurement, research, development, test & evaluation and foreign military sales funds.

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Potential for Growth

Following in the footsteps of the U.S. and its allies, other countries are working on utilizing advanced technology in their defense systems. Thus, foreign military contracts are a vital growth driver for Raytheon. International bookings comprised 26.7% of total first-quarter bookings. International sales surged 17.1% and represented 42% of its total backlog during the quarter.

Other Defense Deals

The company has been enjoying a steady stream of contracts from government establishments. Last month, Raytheon won a contract worth $118.5 million from the U.S. Air Force to supply the Lot 9 Miniature Air Launched Decoy Jammer (“MALD-J”) vehicles and support equipment.

The company also won a foreign military sales contract worth $523.4 million from the U.S. Army to upgrade six PATRIOT fire units.

Long-Term Prospects

Raytheon’s bookings in the first quarter were $6.2 billion compared with $4.5 billion in the year-ago period, reflecting a year-over-year increase of 38.7%. The company remains optimistic about its performance in 2016 backed by its robust backlog of $34.77 billion in the first quarter.

Zacks Rank & Key Picks

Raytheon currently carries a Zacks Rank #2 (Buy).

Some other favorably placed stocks in the same space include TransDigm Group Incorporated (NYSE:TDG) , Curtiss-Wright Corporation (NYSE:CW) and CAE Inc. (TO:CAE) . While TransDigm Group sports a Zacks Rank #1 (Strong Buy), both Curtiss-Wright Corporation and CAE Inc. hold the same rank as Raytheon.