Defense giant Raytheon (RTN) is the world’s largest producer of guided missiles.
“Strong broad order momentum, a large Patriot backlog, and untapped financial firepower give RTN extended EPS and cash flow per share growth potential” cheers five-star Cowen & Co. analyst Cai Rumohr.
Foreign sales are booming, with sales increasing for the last 14 years. Now Rumohr sees 2018 foreign orders exceeding 2017’s $8.5B, with healthy foreign revenue growth extending out into 2019-20. These include Patriot awards from Romania ($450 million-$500 million initial order in 2018; $2 billion total), Sweden ($1 billion), Poland ($4 billion-$5 billion but could slip into 2019), and a new unidentified European customer ($1.5 billion but in 2019).
Closer to home, rising defense spending means RTN also has ample domestic opportunities lined up. Most notably, the Harpoon replacement missile bid, an $8 billion opportunity, could be decided as soon as fall 2018.
All in all, it’s not surprising that RTN scores a first-class “strong buy” Street consensus rating. We can see from TipRanks that the average analyst price target of $231 works out at 6% upside from the current share price.
