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Northrop's (NOC) Unit Wins $1.4B Deal to Manufacture IBCS

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Northrop Grumman Corp.’s (NOC - Free Report) business unit, Northrop Grumman Systems Corp., recently secured a hybrid contract for low-rate initial production and full-rate production of the Integrated Battle Command System (“IBCS”). The award has been offered by the U.S. Army Contracting Command, Redstone Arsenal, AL.

Valued at $1.38 billion, the contract is expected to get completed by Dec 22, 2026.

Significance of IBCS

The IBCS enables warfighters to use any sensor and weapon to achieve mission objectives in a true open architecture environment, thereby increasing battlespace and providing dramatically improved protection. The IBCS offers a fully-integrated environment wherein soldiers trained in surveillance, identification, weapon management, and engagements can collaboratively plan and execute engagements of hostile targets while operating under joint oversight and the rules of engagement.

What’s Favoring Northrop?

In recent times, missile defense played a pivotal role in a nation’s defense strategy. IBCS is a major evolution in the software and hardware development process that continues to affirm Northrop Grumman’s leadership in providing net-centric solutions to warfighters.

Northrop Grumman pioneered the development of integrated battle command solutions and interoperable defense systems. It provides industry-leading expertise in system of systems integration, mission command, battle management, communications, fire control, and integrated air and missile defense systems. Naturally, being a prominent defense contractor, the company frequently wins contracts involving missile defense products like IBCS. The latest contract win is a testament to that.

Prospects

Per Mordor Intelligence, the missiles and missile defense systems market is estimated to register a CAGR of more than 10% between 2020 and 2025. The growing conflict between various countries and the increasing number of investments in missile defense systems being made by nations are expected to drive the market, thereby creating solid growth opportunities for Northrop, which offers significant missile defense to the U.S. Army and its allies.

Other major missile makers like Raytheon Technologies (RTX - Free Report) , Lockheed Martin (LMT - Free Report) and General Dynamics (GD - Free Report) are also expected to benefit, considering the aforementioned prospects of the missile and missile defense market.

Raytheon Missiles & Defense is a leading designer, developer, integrator producer, and sustainer of integrated air and missile defense systems, with the unit serving as a prime contractor or major subcontractor on numerous missile and related programs with the U.S. Department of Defense. Some of its renowned products include StormBreaker smart weapon, Standard Missile-2 and AMRAAM missile.

Raytheon Technologies came out with quarterly earnings of $1.26 per share, beating the Zacks Consensus Estimate of $1.07. RTX stock has gained 20.3% in the past year.

Lockheed’s Missiles and Fire Control business unit develops, manufactures, and supports advanced combat missiles and rockets for military customers, including the U.S. Army, Navy, Air Force, Marine Corps, NASA, and dozens of foreign allies. Some of its prominent products include the PAC-3 missile and the Terminal High Altitude Area Defense missile.

Lockheed’s third-quarter 2021 adjusted earnings of $6.66 per share surpassed the Zacks Consensus Estimate by a whopping 239.8%. LMT boasts a long-term earnings growth rate of 3.6%.

General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.

General Dynamics’ third-quarter 2021 earnings from continuing operations of $3.07 per share surpassed the Zacks Consensus Estimate by 3.4%. GD stock has gained 40.1% in the past year.

Price Performance

Shares of Northrop Grumman have gained 27.2% over a year against the industry’s 29.8% decline.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank

Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.