Time To Address Raytheon's Key Concerns, Wall Street Says

Citi reiterated its Buy rating on Raytheon Company (NYSE: RTN) Wednesday and maintained a $115 price target.

Analysts led by Jason Gursky felt that investor concerns over "lagging sales, margin pressure and cash deployment" were "overblown."

Addressing sales, Gursky felt that domestic sales [would] benefit from recent wins like AMDR, NGJ & 3DELRR which should enable the company to at least keep pace with weapons spending growth."

Gursky did express concern that near-term defense sales expectations might pace "ahead of reality," however, the company remained a "major supplier on almost every major platform" and the analysts saw Middle East sales remaining "intact despite lower oil prices."

Pressure on margins was attributed "to new Patriot programs ramping up" and as was seen in 2009, the company was expected to "overcome this negative mix-shift in 1-2 years and re-test previous margin peaks."

Regarding cash deployment, Gursky said the company continued to be "committed to dvd/repo even as M&A spending returns to its historic norm," and there had "been no change in management's approach."

The analysts concluded by adding that "concerns over dramatic cuts to DoD budgets are unfounded given the current geopolitical environment, the stickiness of budgets, and historic patterns of budget declines."

Raytheon closed at $105.44 Wednesday, up 0.48 percent.