BOSTON - Raytheon Co. extended a run of strong fourth-quarter results by defense contractors, with recent big contract awards boosting Raytheon's prospects for 2008 as well.
An updated financial forecast Thursday from the world's fifth-largest defense contractor nevertheless falls just shy of Wall Street expectations. Raytheon's fourth-quarter profit and sales exceeded analysts' forecasts, and the company's shares rose $1.71, or 2.7 percent, to $65.14, recovering from a small dip in opening trading.
"I think Wall Street was anticipating their guidance would be modestly above where it is, but it is a good strong year they're looking toward, and the fourth quarter was better than anticipated," said JSA Research analyst Paul Nisbet.
Raytheon's results were in line with other major contractors' fourth-quarter numbers that that either met or exceeded Wall Street expectations, Nisbet said. The exception was Northrop Grumman Corp., whose net income was basically flat compared with a year earlier.
Raytheon's fourth-quarter earnings jumped 64 percent, due in part to a $214 million gain from a tax benefit — a previously disclosed refund involving tax claims dating to the 1980s.
Lower interest and pension expenses, as well as more streamlined operations, also boosted the Waltham-based company's quarterly net income to $598 million, or $1.37 per share, from $365 million, or 81 cents per share, in the previous year's fourth quarter. Sales rose 8 percent to $6 billion.
The latest quarter's profit was reduced by an after-tax loss of $36 million, or 8 cents per share, from discontinued operations.
Excluding that item and the 49-cents-per-share tax refund, Raytheon's adjusted earnings from continuing operations were 96 cents per share, up 26 percent.
The latest quarter's adjusted profit, and the company's $6 billion in sales, beat the consensus forecast of analysts surveyed by Thomson Financial, who expected a profit of 92 cents per share, and sales of $5.89 billion.
Raytheon's biggest quarterly sales gains came at its Intelligence and Information Systems unit, with a 17 percent increase, and Network Centric Systems, up 13 percent.
For this year, the 72,000-employee company expects earnings from continuing operations of $3.65 to $3.80 per share — just shy of analysts' forecast of $3.81 per share, and up from Raytheon's previous guidance of $3.45 to $3.65 per share.
Raytheon's updated 2008 sales forecast is $22.4 billion to $22.9 billion, a range in line with analysts' $22.69 billion estimate. Raytheon's new forecast is $300 million above the range offered in October.
Chief Financial Officer David Wajsgras told analysts on a conference call that the company's higher expectations are driven by "competitive winds in the fourth quarter," when Raytheon won several key contracts.
Contracts booked in the fourth quarter rose 21 percent to $9.2 billion from $7.6 billion in the year-ago quarter. Recent awards include a $1.35 billion deal with the British government for border security, and a $1.2 billion Air Warfare Destroyers contract with the Royal Australian Navy.
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