Harris Wins Middle East Contract - Analyst Blog
18 Settembre 2012 - 3:45PM
Zacks
Harris Corporation
(HRS), a leader in the public safety and professional communication
market, received an order from Middle East worth $25 million for
its Falcon II high frequency tactical radios as a part of the
country’s effort to upgrade its military communication system.
As a part of the deal, Harris will
supply its path breaking Falcon II RF-5800H base stations,
Vehicular systems and manpack radios to provide terrestrial voice
and data communications in remote and inaccessible areas for the
country’s armed forces. Harris’s RF-5800H offers advanced features
like third generation-Automatic Link Establishment for initiating
contact between two HF radios coupled with providing links for data
sharing. Harris's Falcon II HF manpack radio provides reliable
long-range communications with enhanced secure voice and data
performance.
Harris’s RF Communications segment
provides secure radio communications and embedded high-grade
encryption solutions for military, government and commercial
organizations. The company’s Falcon II software-based radios other
than easily adapting latest technology also allows new features to
be added quickly and cost effectively.
Growing momentum in the RF
Communications segment in the international markets is likely to
continue since Harris’s next-generation Falcon II and Falcon III
tactical radio products are receiving increasing market traction.
At the end of the previous quarter, order backlog came in at $1.3
billion including $665 million in Tactical Radio Communications
segment.
We believe, this order from the
Middle East will not only expand the company’s international
presence and order book but will also reduce its dependence on the
U.S. government, which has decided to squeeze its defense budget by
nearly $500 billion over the next decade.
However, slowdown in international
as well as national defense expenditures coupled with intense
competition from the likes of General Dynamics
Corp. (GD) and Motorola Solutions, Inc.
(MSI) can put Harris on the back foot.
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 5.92%. For fiscal years
2013 and 2014, the Zacks Consensus Estimates stand at $5.15 and
$5.28 with a growth rate of (0.91%) and 2.52% respectively.
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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