Defense contractor Raytheon Co reported a higher quarterly profit yesterday, aided by a lower share count and increased sales, and it forecast higher earnings for 2010.
Raytheon, which makes sensors, radar systems and missiles, reported net income of $490 million, or $1.25 a diluted share, for the third quarter, compared with $427 million, or $1.00 a share, for the year earlier.
Analysts expected profit of $1.16 a share, according to Thomson Reuters I/B/E/S.
“This was another high-quality quarter from a high-quality company,” Macquarie Securities analyst Rob Stallard said in a note to clients.
He added that Raytheon’s “diversified defense portfolio seems to be holding up relatively better than expected despite the numerous (US defense) program cancellations.”
Revenue rose 6 % to $6.2 billion, compared with $6.18 billion expected by analysts.
The company forecast a 2010 profit of $4.75 to $4.90 a share, including impact from pension adjustments, and revenue of $25.9 billion to $26.4 billion. Analysts expect 2010 profit of $5.00 on revenue of $26 billion, according to Thomson Reuters I/B/E/S.
Raytheon boosted its profit forecast for this year, saying it now anticipates profit from continuing operations of $4.70 to $4.80 a share for 2009, compared with a prior view of $4.60 to $4.75 a share. Analysts expect $4.78 a share for 2009.
Investors are concerned that the defense industry will underperform as the Obama administration spends less on traditional fighter jets and warships and focuses more on weapons and services needed to fight insurgents in places like Afghanistan.
Earlier this week, top Pentagon supplier Lockheed Martin Corp gave a 2010 forecast that disappointed analysts. Northrop Grumman raised its 2009 full-year forecast on Wednesday, but said it would discuss 2010 at a later date.
“We feel positive about our ability to continue to outpace the general market,” Raytheon Chief Financial Officer David Wajsgras said. “We are continuing to expand in our core or addressable markets.”
For instance, Raytheon this quarter expects to close the $350 million purchase of BBN Technologies, which makes a device that alerts troops to incoming sniper fire.
Raytheon shares were up $1.36, or 3 %, at $46.52 in early New York Stock Exchange trading. Lockheed rose $1.05, or 1.5 %, to $70.71 and Northrop gained 31 cents to $49.90.