HRS Harris Corp.

A leading supplier of communications equipment and services, Harris Corp. (HRS) recently won a two-year follow-on contract worth $15 million from the U.S. Air Force. As per the agreement, Harris will supply 135 Warhead Replacement Tactical Telemetry Modules (WRTTMs) to the Air Logistics Center at Warner Robins Air Force Base in Georgia. U.S.

The new technology will enable the U.S. Air Force to provide support to Advanced Medium-Range Air-to-Air Missile system (AMRAAM). It will also provide flight and performance information about the missile, as well as evaluate the destruct capability of the missile between the time space of its launch and impact. The follow-on contract brings the overall value of the contract for Harris to more than $170 million since 1991.

Harris Corp.reported an excellent second quarter 2011 financial results with revenue increasing 18.1% year over year. Total orders generated during the quarter were $1.41 billion. In the ensuing third quarter of 2011, Harris has already won contracts worth more than $1 billion, thereby showing strong signs of growth. Moreover, the company will benefit from higher defense expenditure by the U.S. government coupled with acquisitions and new expansion drives in the Asian, European & African markets.

With huge cash availability, the company is focusing on inorganic growth. Recently, the company completed the acquisition ofGlobal Connectivity Services (GCS) business from Schlumberger Ltd. It has also bought Carefx Corporation, a leading provider of interoperability workflow solutions. The acquisition of Carefx Corporation will give Harris a strong foothold in the commercial healthcare market. However, competition from companies like Boeing Co. (BA), General Dynamics Corp. (GD) and Raytheon Co. (RTN) is expected to put Harris on the back foot.

We, thus, maintain our long-term Neutral recommendation for Harris Corporation. Currently, Harris Corporation has a Zacks#3 Rank, implying a short-term Hold rating on the stock.

 
BOEING CO (BA): Free Stock Analysis Report
 
GENL DYNAMICS (GD): Free Stock Analysis Report
 
HARRIS CORP (HRS): Free Stock Analysis Report
 
RAYTHEON CO (RTN): Free Stock Analysis Report
 
Zacks Investment Research