Harris Gets US Air Force Contract - Analyst Blog
23 Agosto 2012 - 4:52PM
Zacks
Harris Corporation
(HRS), a leader in the public safety and professional
communications market, has won a System and Network integration
contract from the U.S. Air Force.
The contract is for one year with
three one-year extension options, and is valued at $46 million. As
part of the deal, the Melbourne-Florida based Harris will provide
IT support services for North American Air Defense Command (NORAD)
and U.S. Northern Command (USNORTHCOM) with most of the work to be
done at Peterson Air Force Base in Colorado. The Harris team is
comprised of Abacus Technology Corporation, Sra International Inc.
and Microsoft Consulting Services.
NORAD is a bi-national (U.S. and
Canada) organization that prevents air attack, safeguards the
sovereign airspace and provides aerospace and maritime warning to
North America. Meanwhile, USNORTHCOM conducts relief operations
during natural disasters like hurricane, floods and
earthquakes.
Harris will provide IT planning,
projects, designs, testing, validation, component installation,
diagnostic, software procurement and repair among others. Harris
should deliver best in class IT infrastructure framework to the
U.S. Air Force owing to its expertise in delivering mission
critical IT services to various sectors.
Recently, Harris declared its
fiscal fourth-quarter 2012 financial results with EPS surpassing
the Zacks Consensus Estimate, Integrated Network Solution generated
revenues of $379 million, down 9.6% year over year.
We believe that winning this
contract will improve the company’s Integrated Network Solution
order book, which was earlier enriched by an order worth $750.0
million from the U.S. Department of State’s Bureau of Consular
Affairs. Additionally, the company is trying to capitalize on the
current Air Force Investment as it recently won a $6.5 million
order from them.
However, slowdowns in international
and national defense expenditures. coupled with intense competition
from the likes of General Dynamics Corp. (GD) and
Motorola Solutions, Inc. (MSI), will pressure
Harris.
The current Zacks Consensus
Estimate for Harris Corp. is pegged at $1.12 for the fiscal first
quarter 2013 with a growth rate estimate of 5.57%. For fiscal years
2013 and 2014, the Zacks Consensus Estimates stand at $5.15 and
$5.27, respectively, with a growth rate of (0.93%) and 2.20%.
Recommendation:
We maintain our long-term Neutral
recommendation on Harris Corp. Currently, HRS has a Zacks #3 Rank,
implying a short-term Hold rating on the stock.
GENL DYNAMICS (GD): Free Stock Analysis Report
HARRIS CORP (HRS): Free Stock Analysis Report
MOTOROLA SOLUTN (MSI): Free Stock Analysis Report
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