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Northrop (NOC) Arm Wins $248.2M Deal for MQ-4C Triton UAS

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Northrop Grumman Corporation’s(NOC - Free Report) business unit, Northrop Grumman Systems Corp., recently secured a modification contract involving the MQ-4C Triton unmanned aircraft system (“UAS”). Valued at $248.2 million, the contract is projected to be completed by February 2027.

Details of the Deal

The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD. Per the terms, Northrop Grumman will be engaged in procuring two additional low-rate initial-production Lot 5 of the MQ-4C Triton UAS.

The work involved in the deal will be carried out in multiple locations across the United States.

What’s Favoring Northrop Grumman?

Nations are reinforcing their defense landscapes to strengthen their warfare capabilities. Such enhancements include increased spending on defense equipment and arsenals. In such a scenario, due to the ever-changing military needs, defense products are technologically upgraded to carry out the mission efficiently.

In this context, it is imperative to mention that UAS demand has been gaining momentum of late due to its low-cost feature coupled with the zero-mortality rate and its excellent surveillance abilities.

Meanwhile, Northrop Grumman, which boasts significant excellence in UAS manufacturing, is likely to witness strong order inflows involving the UAS. The latest contract win is a testament to this fact, which should boost NOC’s revenues in the coming days.

Growth Prospects

Per the Markets and Markets report, the military unmanned aircraft market is projected to expand at a CAGR of 16.4% during the 2021-2026 period. This stands to benefit not only Northrop Grumman but also prominent defense majors like Boeing (BA - Free Report) , Textron (TXT - Free Report) and Raytheon Technologies (RTX - Free Report) , which are engaged in the UAS market.

Boeing’s Insitu unit offers the high-performance, low-cost UAS used for surveillance, and reconnaissance missions. Its MQ-25 UAS brings the right combination of refueling, autonomy and seamless carrier deck integration to meet the U.S. Navy’s goals.

Boeing’s long-term earnings growth rate stands at 4%. The Zacks Consensus Estimate for BA’s 2022 sales indicates an improvement of 21.8% from the prior-year reported figure.

Textron’s business unit, Textron Systems’ multi-mission-capable UAS includes the Shadow Tactical UAS, the Aerosonde Small UAS with the available Aerosonde HQ vertical-takeoff-and-landing kit and the next-generation NIGHTWARDEN Tactical UAS.

The long-term growth rate of Textron is pegged at 12.7%. The Zacks Consensus Estimate for TXT’s 2022 earnings suggests an improvement of 21.5% from the prior-year reported figure.

Raytheon’s Coyote UAS is small, expendable and tube-launched. It can be deployed from the ground, air or a ship. The Coyote UAS can be flown individually or netted together in swarms and is adaptable to a variety of missions, including surveillance, electronic warfare and strikes.

The long-term growth rate of Raytheon is pegged at 10.5%. RTX shares have rallied 6.8% in the past year.

Price Movement

In the past year, shares of Northrop Grumman have surged 24% against the industry’s decline of 43.3%.

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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.