Harris Corp. (HRS) has won a 5-year Indefinite Delivery, Indefinite Quantity (IDIQ) contract to provide tactical and land mobile radios to international allies of the U.S. State Department and U.S. Department of Defense. The potential size of the contract is $475 million.

In a nutshell, Harris will supply its pathbreaking RF Falcon II and Falcon III products. As a leading government electronics supplier, Harris is benefiting from the increase in U.S. defense expenditure as well as strong International market conditions.

Emerging economies like Brazil, Russia, India, and China together with Latin America, Asia Pacific, and Africa pave the way for the company’s long-term growth. Harris has a sustainable and diversified product pipeline with a potential market size of $15 billion. International market opportunities are supplementing very well for any deficiency in the domestic U.S. market. Strong momentum in the RF Communications segment will continue in future since Harris’ next-generation Falcon III tactical radio is receiving increasing market traction.

During the first quarter of fiscal 2011, Harris generated $1.3 billion orders for this segment resulting in a book-to-bill ratio of 0.9. We believe Harris will be able to attain book-to-bill ratio of 1.0 for fiscal 2011 due to its growing international businesses. Order backlog was $1.67 billion including $1.19 billion in tactical radio communications. Furthermore, tactical radios constitute $3.3 billion pipeline opportunity.

Harris operates in a highly competitive communication equipment industry and faces intense competition from Boeing Co. (BA), General Dynamics Corp. (GD) and Raytheon Co. (RTN). Despite this, the company establishes itself as a global provider of communication equipment and services for government and commercial customers with its presence in more than 150 countries.

We maintain our long-term Neutral recommendation for Harris. Currently, it holds a short-term Zacks #3 (Hold) Rank on the stock.

 
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