Raytheon Secures $427M Common Sensor Payload Systems Deal
Zacks Investment Research | Sep 16, 2019 08:06AM ET
Raytheon Company (NYSE:RTN) recently secured a $427.3-million contract for the procurement of Common Sensor Payload systems. The contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, MD.
Per the deal, Raytheon will also provide spare parts for the payload systems as well as other associated engineering and system support services. Work related to the deal is scheduled to get completed by Sep 12, 2024.
A Brief on Common Sensor Payload Systems
The Common Sensor Payload (CSP) is an electro-optical/infrared sensor (EO/IR) system for the U.S. Army’s MQ-1C Gray Eagle unmanned aircraft system. The new CSP systems are built on the existing CSP system to upgrade existing electronic sensors, providing significantly improved image quality and resolution that enhances night navigation, extraction operations, combat search and seizure operations. This sensor can also be employed in a variety of aircraft, allowing soldiers to accurately assess threats and effectively engage targets.
What Favors Raytheon?
Increasing cyberattacks, threats and geopolitical instabilities globally call for an immediate requirement for the ramping up of security and defense programs. One way of achieving this is by adopting to technologically-advanced radar programs that offer massive advances in both civilian and military technologies. Raytheon, being a producer of a wide range of next-generation radars, enjoys a pioneering position in the global radar and sensor market.
As a result, the company's Space and Airborne Systems (SAS) segment, specialized in manufacturing integrated sensors and communication systems for advanced missions, has been witnessing a substantial rise in its net sales over the past few years. During the second quarter of 2019, sales at this segment grew 13% year over year to $1,817 million. In line with this, we expect the latest contract to add significant impetus to the company’s performance in the days ahead.
Looking Ahead
Per a report by Markets and Markets research firm, the global drone payload market is expected to grow to $7.72 billion by 2021 from $3.63 billion in 2016, at an estimated CAGR of 16.25%. Such impressive projections are expected to be backed by increased demand for sensor payloads systems as well as its associated sub-systems, products and technical services. Hence, Raytheon being a prominent payload systems manufacturer is most likely to benefit from such favorable projections.
Price Performance
Shares of Raytheon have gained 11.1% in the past three months compared with the Zacks Investment Research
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