Raytheon Buys Foreground Security to Boost Cybersecurity

Shares of Raytheon Company RTN increased 2.5% after the company announced its acquisition of Herndon, VA-based Foreground Security, which is aimed to enhance its cybersecurity and electronic warfare capabilities.

Financial details of the acquisition were not disclosed by the company.

Foreground Security is a provider of managed security operations centers and cyber-security services. Post the acquisition, it will operate as Raytheon Foreground Security ("RFS") as part of Raytheon Intelligence, Information and Services.

RFS has a strong portfolio of solutions and proprietary technology in some of the booming segments of the cybersecurity space. These will help Raytheon expand its managed security services to the federal, international and commercial markets. Out of approximately 165 employees under RFS, 85% have been trained as cybersecurity experts.

Foreground Security monitors cyber threats through its Virtual Security Operations Center and Automated Threat Intelligence Platform.

In recent years, Raytheon has invested more than $3.5 billion to expand its cybersecurity capabilities. The company aims to provide best-in-class security solutions to the U.S. Department of Homeland Security to counter rising cyber threats. According to the company, cybersecurity incidents have escalated an average 66% on a yearly basis between 2009 and 2014 globally.

In a bid to counter the ongoing sequestration in the U.S. defense spending, Raytheon has been investing heavily in technological upgrades. The company has been acquiring surveillance and cybersecurity companies hoping to boost its intelligence business and leverage the commercial prospects of cyber. With the U.S. fiscal 2016 budget proposal emphasizing cyber programs, cyber-oriented work is expected to yield solid growth in the coming years.

In the same context, in May 2015, Raytheon acquired Websense for $1.9 billion. The newly formed unit – Raytheon|Websense – combined Raytheon's advanced cyber security technologies with Websense's TRITON platform to create a new level of defense-grade cyber security solutions. It provides unified web, email, mobile and data security solutions globally for protecting an organization's data and users from external and internal threats.

Zacks Rank

Raytheon Company currently has a Zacks Rank #3 (Hold). A better-ranked stock in the industry include LMI Aerospace Inc. LMIA, sporting a Zacks Rank #1 (Strong Buy). The Boeing Company BA and Lockheed Martin Corporation LMT are other well-ranked stocks in the broader aerospace and defense space. Both carry a Zacks Rank #2 (Buy).

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