Raytheon Wins $94M Army Deal For Excalibur 155mm Projectiles
Zacks Investment Research | Jun 18, 2018 06:29AM ET
Raytheon Company’s (NYSE:RTN) Missile Systems (MS) business unit recently won a $93.7 million modification contract for Excalibur 155mm projectiles. The contract was awarded by the U.S. Army Contracting Command, NJ.
Details of the Deal
Work related to the deal will be performed in Karlskoga, Sweden; South Plymouth and Glenrothes, the United Kingdom; and various locations across the United States.
The agreement is expected to get completed by Sep 30, 2020. Raytheon will utilize fiscal 2018 other procurement (Army) funds for completing the task.
Benefits of Excalibur 155mm Projectiles
Raytheon's Excalibur projectile is an extended range guided artillery shell that accurately extends the reach of .39-caliber artillery to 40 km and .52-caliber artillery to more than 50 km. Its overall precision, coupled with the ability to be integrated on multiple gun systems, enables both the U.S. and its coalition partners provide overmatch capabilities against land targets in a variety of combat environments, including stationary land targets.
Raytheon is currently developing a laser-guided version of the projectile, the Excalibur S, which incorporates a digital semi-active laser seeker, allowing it to strike moving targets without accurate location information. Further, it reduces the risk associated with GPS jamming.
Due to the variety of advantages it possesses, nations like Sweden, Canada, Australia and the Netherlands have already chosen the Excalibur precision-guided projectile to address vital security interests, while several other international militaries are finalizing procurement plans.
What’s Favoring Raytheon?
Increasing geo-political tensions across the globe have prompted nations to strengthen their defense systems manifold. With rapid technological development, missile defense has steadily emerged to play a pivotal role in a nation’s defense strategy.
To this end, Raytheon’s advanced MS segment has been clinching significant awards from the United States as well as international customers, courtesy of its high-end, combat-proven arsenals. The latest contract win is evidence to that.
Notably, the MS division recorded first-quarter 2018 net sales of $1,848 million, reflecting a 5% improvement from the year-ago quarter. We may expect the aforementioned contract to instill further growth in this segment, going ahead.
Moreover, Raytheon benefited from the fiscal 2018 appropriations bill that witnessed an increase of $150 million for its Excalibur program. In relation to this increased spending provisions, the company expects to acquire more bookings in 2018 and a favorable sales growth in 2019 and beyond.
Price Movement
Raytheon’s stock has improved about 22.7% in the last twelve months compared with the broader Zacks Investment Research
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