Raytheon BBN Technologies, a wholly owned subsidiary of Raytheon Company (RTN), has received a $1.9 million contract in defense research funding from the Defense Advanced Research Projects Agency.
Under the contract Raytheon will develop safeguards for military Internet communications abroad. The contract would support the Safer Warfighter Communications program that targets developing technology overseas enabling protected, resilient Internet communications for warfighters.
BBN Technologies proposes a solution using several innovative approaches, including novel routing and packet delivery techniques and other original methods to enhance security.
In October 2009, Raytheon had acquired BBN Technologies for approximately $350 million. Its diversified portfolio includes advanced networking, speech and language technologies, information technologies, sensor systems, and cyber security.
Raytheon is one of the best-positioned companies among the large-cap defense players because of its non-platform-centric focus. Looking forward, the company enjoys strong order bookings and order backlog, an improving balance sheet, growing cash flow, operational improvements and an above industry average ROE.
However, this is 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 January this year, Raytheon Company reported fourth-quarter 2010 adjusted earnings of $1.57 per share, beating the Zacks Consensus Estimate by $0.42. For full year 2010, Raytheon reported adjusted earnings of $5.58 per share, surpassing the Zacks Consensus Estimate by a substantial $0.99. Revenue reported in the quarter was $6.9 billion, slightly behind the Zacks Consensus Estimate of $7.1 billion. Full year 2010 revenue was $24.9 billion versus the Zacks Consensus Estimate of $25.4 billion.
Going forward, the Zacks Consensus Estimates for first quarter 2011 and fiscal year 2011 are currently at $1.09 per share and $5.00 per share, respectively.
Based in Massachusetts, Raytheon 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. The company mainly competes with The Boeing Co. (BA) and Lockheed Martin Corporation (LMT).
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