Zacks_Analysts' Blog : Raytheon Builds SOA Systems - Analyst Blog

Raytheon Company (RTN) is developing a Service-Oriented Architecture (SOA) that enables rapid integration of weapons and sensors with a framework that is capable of providing unmanned aircraft systems (“UAS”).

Service-Oriented Architecture organizes discrete functions contained in enterprise applications. These are interoperable, standard-based services that can be combined and reused quickly to meet business needs. It helps in increasing revenues, enhancing customer satisfaction, reducing operational costs, and helping in reaping higher returns on existing technology investments.

Raytheon's framework resides on a computing platform sized to fit within the available space on a wide variety of unmanned aircraft. The SOA framework on an UAS is similar to the hardware and operating system used by a tablet computer. The framework provides the necessary infrastructure while its applications control the weapons, sensors, communications and other vital UAS mission-level functions.

Raytheon has completed the development of domain manager for sensor and weapon integration and is in the process of creating other domain managers for key UAS functions.

Raytheon is one of the best-positioned companies in the defense sector. Looking forward, growth will be driven by its focus on intelligence, surveillance and reconnaissance 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 #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.

Recently, Raytheon Company reported second-quarter 2011 operating earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.16. Results were, however, higher than the year-ago quarterly earnings of $1.34 per share.

Headquartered 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 mainly competes with The Boeing Company (BA) and Northrop Grumman Corporation (NOC).