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Northrop (NOC) Wins Deal to Aid France's E-2D Hawkeye Program

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Northrop Grumman Corp.’s (NOC - Free Report) business unit, Aerospace Systems, recently secured a modification contract to procure long-lead items and associated services, in support of the production and delivery of three E-2D Advanced Hawkeye aircraft for the government of France. Work related to the deal is expected to be completed by April 2027.

Valued at $99 million, the contract was awarded by the Naval Air Systems Command, Patuxent River, MD. The majority of the task will be carried out in Syracuse, NY, and El Segundo, CA.

Northrop’s Hawkeye Aircraft’s Attributes

Hawkeye is an airborne, all-weather, tactical, early-warning aircraft used by the U.S. Navy. E-2D is the fourth version of the E-2 Hawkeye. Notably, the E-2D Advanced Hawkeye has a structurally distinctive design — a rotating rotodome along with four vertical stabilizer tail configurations — which provides 360-degree surveillance at all times. These technologies fitted in this aircraft increase its visibility on faraway targets.

Northrop Grumman is supported by other industry leaders on this program. Lockheed Martin’s (LMT - Free Report) unit supplies the principal AN/APY-9 radar system for the Hawkeye. L3Harris Technologies’ (LHX - Free Report) unit supplies the ultra-high frequency, electronically-scanned array antenna. Meanwhile, Raytheon Technologies’ Space and Airborne Systems provides the T-56-A engines. Such support from other prominent defense majors makes the Hawkeye aircraft program even more attractive.

Northrop Grumman’s Presence in France

The French Navy has been operating Northrop Grumman's E-2C Hawkeye since 1998 and is the only country other than the United States to operate its E-2 Hawkeyes from an aircraft carrier. Earlier in January 2021, the government of France signed a Letter of Offer and Acceptance (LOA) with the U.S. government and showed its intent to purchase the E-2D Advanced Hawkeye. The latest deal will notably enable Northrop Grumman to strengthen its existing position in France.

What Favors Northrop Grumman?

In recent times, the importance of military aircraft in the U.S. aerospace-defense market has gained significant traction. This upside can be attributed to advancements and integration of new tactical and logistical features along with the inclusion of improved radar systems and the availability of advanced system engineering services. As the E-2D Hawkeye aircraft is a significant defense program for the government of the United States, we can expect more contract inflows like the latest one in the near future. These, in turn, should further bolster the Aerospace segment’s top line in the coming days.

The current U.S. administration recently presented the President’s FY 2022 discretionary funding request for the Department of Defense to Congress. The administration has asked for $753 billion in national security funding, reflecting an increase of 1.6% that includes $715 billion for the Defense Department. Such solid budgetary amendments, if approved, should enable Northrop Grumman to procure more significant contracts related to military aircraft, like the latest one.

Zacks Rank & Price Performance

Northrop Grumman currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, Northrop Grumman’s shares have gained 15.9% compared with the industry’s 14.6% growth.

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