Raytheon Company (RTN”>RTN) has received two radar contracts under which it will provide AN/TPY-2 radars to the Terminal High Altitude Area Defense (“THAAD”) missile defense system of the U.S. Army and United Arab Emirates (“UAE”).
Per the firm-fixed-price contract worth $363.9 million, the company will provide two AN/TPY-2 radars to the U.S Army.
Under the $582.5 million radar contract with UAE, besides providing AN/TPY-2 radar, the company will also aid UAE with associated spares, training and other services through 2018. It will add to the Emirates’ unique surveillance and defensive capabilities and make it well positioned to defend itself from threats with the help of world’s most advanced mobile radar.
The radar will be provided to the UAE through the Missile Defense Agency (“MDA”) as a Foreign Military Sale under the Arms Export Control Act. With this contract, UAE will be become the first international customer of the THAAD missile systems.
The AN/TPY-2 is the world’s most advanced, mobile X-band radar. This multi-functional radar detects, tracks and discriminates ballistic missile threats, effortlessly integrating with a variety of ballistic defense systems.
Apart from being used as a part of a THAAD Battery, AN/TPY-2 radars are deployed around the world to provide continuous forward-based ballistic missile defense, which is a key component of the global Ballistic Missile Defense Architecture.
THAAD is designed, built, and integrated by Lockheed Martin Space Systems, a subsidiary of Lockheed Martin Corporation (LMT”>LMT) and is used to shoot down all kinds of ballistic missiles in their terminal phase.
The company indicated that work on the AN/TPY-2 radars for both these contracts will be carried out at Raytheon facilities in Massachusetts.
Raytheon is one of the best-positioned companies among the large-cap defense players owing to its non-platform-centric focus. Future growth is expected to be driven by its focus on ISR unmanned systems, training, cyber security, Standard Missile-6, Patriot, Zumwalt and THAAD.
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.
Based in Waltham, Massachusetts, Raytheon Company is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services.
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