Raytheon Company (RTN) received a contract from The Boeing Company (BA) to produce and deliver APG-79 active electronically scanned array (AESA) radars for F/A-18 Super Hornet tactical aircraft. Under the second procurement contract in the four-year Multi-Year III program, the company is liable to produce 42 APG-79 AESA radars.

The APG-79 AESA radar hardware has 10-15 times greater reliability in comparison to mechanically scanned array radars that make it more affordable over the service life of the unit. This hardware provides lower maintenance rates as well as leading-edge technology for situational awareness.

The production will be made at Raytheon facilities in El Segundo, California; Andover, Massachusetts; Forest, Mississippi; and Dallas, Texas.

In 2005, Raytheon’s netcentric enabled radar system, APG-79 AESA, had been awarded a significant multi-year procurement contract worth $580.0 million by The Boeing Company.

Raytheon is one of the best-positioned companies among the large-cap defense players due to its non-platform-centric focus as well as its strong order bookings and order backlog. Revenue and earnings growth continue to be driven by a strong presence in the areas of Intelligence, Surveillance and Reconnaissance, missile defense; border security, training and mission support; and cyber security.

This is, however, offset by apprehensions over future growth of the U.S. defense budget, the fate of high-cost programs, risks related to key project executions and order cancellations. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

In April this year, Raytheon Company reported first quarter 2011 adjusted earnings of $1.38 per share, beating the Zacks Consensus Estimate of $1.09. Raytheon reported revenues of $6.1 billion in the quarter under review, approximately flat with both the prior-year period as well as the Zacks Consensus Estimate. Bookings in the current quarter were $5.1 billion versus $6.5 billion in the year-ago period. Backlog in the reported quarter totaled $33.7 billion, of which $21.7 billion comprised funded backlog.

Based in Massachusetts, Raytheon Company is one of the largest aerospace and defense companies in the U.S. with a diversified line of military products, including missiles, radars, sensors, surveillance and reconnaissance equipment, communication and information systems, naval systems, air traffic control systems, and technical services.

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