Raytheon shares hit record highs on Syria war talk

It's been a dramatic six months for Raytheon (RTN +0.44%). Earlier this year, shares of the defense giant were at a 52-week low, pressured by the federal sequestration's effect on the U.S. defense budget, according to The Boston Business Journal. But this week, with talk of a U.S. assault on Syria, Raytheon's stock is up 50% to an all-time high. Shares closed Friday at $75.41.


Raytheon produces Tomahawk cruise missiles -- Washington's opening-volley weapon of choice in many recent conflicts and what analysts believe will be among the first shots fired if the U.S. intervenes in Syria.


A possible attack on Syria would likely signal new Pentagon orders of Tomahawks. Politico reports that the Pentagon purchases 196 Tomahawks annually -- which is considered the "minimum sustaining rate" to maintain the weapon's supply chain. But the website also notes production of the missiles had to increased after hundreds of them were used during the 2011 air war against Libya.


If you account for those extra orders, notes Politico, "Raytheon has delivered 252 missiles this fiscal year and 361 last fiscal year." If and when a conflict with Syria does break out, there will certainly be more demand for the Tomahawks -- which a Navy official recently told moneyNOW cost about $1.2 million each.


"There’s a number that has to be available," an unnamed defense lobbyist told Politico. "If they fall below that number, they’ll replace them."

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