Northrop Grumman Corp. (NOC - Analyst Report) yesterday clinched several Department of Defense (DoD) contracts totaling $131.9 million. Of this, a lofty $101.59 million Air Force contract was won by the company’s subsidiary Northrop Grumman Technical Services Inc.
The extended modification contract calls for the sustainment of the propulsion, guidance and reentry system in the reentry vehicle systems of the Intercontinental Ballistic Missile ("ICBM") weapon under the ICBM partial bridge contract.
The contract is expected to be completed by Sep 29, 2014 and the work will be carried out at Hill Air Force Base, Utah. The contracting activity is the Air Force Nuclear Weapons Center, Hill Air Force Base, Utah.
The second $22.3 million modification contract was received by Northrop Grumman Information Technology for continued support of nuclear safety cross-check analysis, performance analysis, technical evaluation, independent verification and validation services. The deal will expire in Sep 2016. The final contract valued around $8.0 million involved offering R&D services to improve systems capability of the Advanced Electronic Protect, Integrated Air and Missile Defense ("IAMD") System and to develop the IAMD Battle Command System.
In Aug 2013, Northrop lost out to BAE Systems in a substantial Air Force contract to maintain mission readiness of the nation's intercontinental ballistic missiles. This came as a major blow to the company.
However, the company’s diversified operations helped it to secure sizeable contracts. In the same month, the company received a $153 million aerospace contract for upgrading the National Polar Orbiting Operational Environmental Satellite System, a joint initiative of the DoD, National Aeronautics And Space and Administration as well as National Oceanic Atmosphere Administration.
In addition, Northrop’s increasing efforts to expand its presence in the lucrative market of Saudi Arabia will encourage growth. Japan’s proposed increase in its defense budget in 2014 could also prove to be a boon for Northrop as the country is a key customer.
At the moment, Northrop carries a Zacks Rank #2 (Buy). Other well-placed players in the sector are Zacks Ranked #2 Lockheed Martin Corp. (LMT - Analyst Report), L-3 Communications Holdings Inc. (LLL - Analyst Report) as well as B/E Aerospace, Inc. (BEAV - Snapshot Report).