Krause Fund Research Spring 2020 April 4, 2020 Aerospace and Defense The Raytheon CompanyCurrent (NYSE: Price RTN $116.96) Recommendation: Buy April 4 , 20 April20 2, 2020 Analysts Current Price $116.92 Yichen (Ethan) Sun Target Price $195-$215
[email protected] William Braverman Investment Thesis
[email protected] Glei Hoxhalli We recommend a buy rating for Raytheon because the current
[email protected] stock price does not adequately reflect the outlook for the company. We believe the stock prices recent decline was due to Company Overview the adverse market conditions created by the Covid-19 virus. This decline fails to consider Raytheon’s ability to weather this storm Raytheon is one of the world’s largest defense contractors, due to the long-term nature of their contracts, and the extent of with five main business segments providing products and their backlog. services to domestic and international customers. Raytheon was founded in Delaware in 1922 and has seen continuous Drivers of Thesis: growth. The company focuses on developing missile • Raytheon’s current corporate strategy to automate its systems, surveillance and radar solutions, and advanced manufacturing process, and merge with United space technology. Raytheon has grown to be large enough Technology will decrease their costs and increase to service the U.S Armed Forces and many of its allied margins. nations. On April 2, 2020, the company merged with United • Increase in backlog order from 2018 will cushion the Technologies Corporation to form Raytheon Technologies effect of COVID-19 crisis. and is now listed on the NYSE as RTX. Risks of Thesis: • Recent plunge in oil price will lead to weaker demand Stock Performance Highlights from Middle Easter customers, which drives roughly 52 week High $233.48 half of Raytheon’s international sales.