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Northrop (NOC) Wins Deal to Support MQ-4C Triton Production
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Defense giant, Northrop Grumman Corp.’s (NOC - Free Report) unit, Systems Corp. recently secured a contract to support the planned production schedule of MQ-4C Triton unmanned aircraft system (UAS). Work related to this deal is scheduled to be over by Dec 2017.
Details of the Deal
Valued at $49.4 million, the aforementioned contract was awarded to the company by the Naval Air Systems Command, Patuxent River, MD. Per the terms of the agreement, Northrop will procure long-lead components, material, parts and associated efforts in relation to the planned production schedule of MQ-4C Triton UAS.
The contract will utilize fiscal 2017 aircraft procurement funds to complete the work, a major portion of which will be executed in Baltimore, MD; Bridgeport, WV; Salt lake City, UT; Red Oak, TX and San Diego, CA. The remaining portion will be carried out in varied locations across the continental U.S.
A Brief Note on MQ-4C Triton
MQ-4C Triton is a new broad-area maritime-surveillance (BAMS) UAS produced by Northrop for the Navy. It is a high-altitude, long-endurance UAS that provides real-time intelligence, surveillance and reconnaissance (ISR) over vast ocean and coastal regions.
The Pentagon had awarded the company a contract worth $1.16 billion for the MQ-4C BAMS program back in Apr 2008 and the first MQ-4C was unveiled in Jun 2012. It can offer persistent maritime surveillance and reconnaissance coverage of wide oceanographic and littoral zones at a mission radius of 2,000 nautical miles. It can also fly 24 hours a day, seven days a week, with 80% effective time on station (ETOS).
Our View
Being the fourth largest U.S. defense contractor, Northrop supplies a broad array of products and services to the U.S. Department of Defense, including defense electronics, unmanned aircraft and missile defense. The company continues to see strong demand for its unmanned air systems on a global scale.
Currently, Donald Trump’s presidency seems to have created a win-win situation for U.S. Aerospace and Defense majors like Northrop, Lockheed Martin Corp. (LMT - Free Report) , The Boeing Co. (BA - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) . Evidently, the outlook for stocks in this space has improved manifold in recent months on the back of enhanced spending promises that Trump had made in his latest “America First” budget.
In addition to that, a moderate flow of funds from the Pentagon also buoys optimism for defense stocks like Northrop. In fact, last week, the company won a modification contract worth $304 million from the U.S. Navy to procure low-rate initial production of three Lot 2 MQ-4C Triton jets (read more: Northrop Grumman Wins $304M Navy Deal for Triton Aircraft). This indicates the huge demand for Northrop’s UAS in the market.
Going ahead, considering the fact that North America dominates the global unmanned aerial vehicle (UAV) market that is set to reach a value worth $28.3 billion by 2022, we expect the increased defense budget spending to unlock significantly higher opportunities for Northrop Grumman.
Price Movement
Northrop’s stock has gained 16.8% in the last one year, underperforming the Zacks categorized Aerospace–Defense industry’s gain of 23.6%. This could be due to higher operating expenses continuing to partially impact Northrop’s profit margin. Moreover, the company may be challenged by economic and political factors. Furthermore, in a highly competitive environment, customers might get attracted to similar products offered by its peers at a lower price, which remains a major concern.
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Northrop (NOC) Wins Deal to Support MQ-4C Triton Production
Defense giant, Northrop Grumman Corp.’s (NOC - Free Report) unit, Systems Corp. recently secured a contract to support the planned production schedule of MQ-4C Triton unmanned aircraft system (UAS). Work related to this deal is scheduled to be over by Dec 2017.
Details of the Deal
Valued at $49.4 million, the aforementioned contract was awarded to the company by the Naval Air Systems Command, Patuxent River, MD. Per the terms of the agreement, Northrop will procure long-lead components, material, parts and associated efforts in relation to the planned production schedule of MQ-4C Triton UAS.
The contract will utilize fiscal 2017 aircraft procurement funds to complete the work, a major portion of which will be executed in Baltimore, MD; Bridgeport, WV; Salt lake City, UT; Red Oak, TX and San Diego, CA. The remaining portion will be carried out in varied locations across the continental U.S.
A Brief Note on MQ-4C Triton
MQ-4C Triton is a new broad-area maritime-surveillance (BAMS) UAS produced by Northrop for the Navy. It is a high-altitude, long-endurance UAS that provides real-time intelligence, surveillance and reconnaissance (ISR) over vast ocean and coastal regions.
The Pentagon had awarded the company a contract worth $1.16 billion for the MQ-4C BAMS program back in Apr 2008 and the first MQ-4C was unveiled in Jun 2012. It can offer persistent maritime surveillance and reconnaissance coverage of wide oceanographic and littoral zones at a mission radius of 2,000 nautical miles. It can also fly 24 hours a day, seven days a week, with 80% effective time on station (ETOS).
Our View
Being the fourth largest U.S. defense contractor, Northrop supplies a broad array of products and services to the U.S. Department of Defense, including defense electronics, unmanned aircraft and missile defense. The company continues to see strong demand for its unmanned air systems on a global scale.
Currently, Donald Trump’s presidency seems to have created a win-win situation for U.S. Aerospace and Defense majors like Northrop, Lockheed Martin Corp. (LMT - Free Report) , The Boeing Co. (BA - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) . Evidently, the outlook for stocks in this space has improved manifold in recent months on the back of enhanced spending promises that Trump had made in his latest “America First” budget.
In addition to that, a moderate flow of funds from the Pentagon also buoys optimism for defense stocks like Northrop. In fact, last week, the company won a modification contract worth $304 million from the U.S. Navy to procure low-rate initial production of three Lot 2 MQ-4C Triton jets (read more: Northrop Grumman Wins $304M Navy Deal for Triton Aircraft). This indicates the huge demand for Northrop’s UAS in the market.
Going ahead, considering the fact that North America dominates the global unmanned aerial vehicle (UAV) market that is set to reach a value worth $28.3 billion by 2022, we expect the increased defense budget spending to unlock significantly higher opportunities for Northrop Grumman.
Price Movement
Northrop’s stock has gained 16.8% in the last one year, underperforming the Zacks categorized Aerospace–Defense industry’s gain of 23.6%. This could be due to higher operating expenses continuing to partially impact Northrop’s profit margin. Moreover, the company may be challenged by economic and political factors. Furthermore, in a highly competitive environment, customers might get attracted to similar products offered by its peers at a lower price, which remains a major concern.
Zacks Rank
Northrop currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>