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Huntington Ingalls (HII) Wins Deal to Aid Lionfish SUUV Production

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Huntington Ingalls Industries Inc. (HII - Free Report) recently clinched a modification contract involving the Lionfish Small Unmanned Undersea Vehicle (“SUUV”). The award has been provided by the Naval Sea Systems Command, Washington, D.C.

Details of the Deal

Valued at $23 million, this contract is projected to be completed by September 2025. Per the terms of the deal, Huntington Ingalls will offer support and ancillary equipment to aid the production of Lionfish SUUV.

The majority of the work related to this deal will be carried out in Pocasset, MA.

What’s Supporting Huntington Ingalls?

Huntington Ingalls is a prominent manufacturer of unmanned undersea vehicles (UUV) worldwide. Serving customers in more than 30 countries, HII provides design, autonomy, manufacturing, testing, operations and sustainment of unmanned systems, including UUVs and unmanned surface vessels.

HII’s REMUS family of UUVs are low logistics UUVs that can be rapidly deployed from any vessel of opportunity, with their common usage in mine countermeasures, antisubmarine warfare, search and recovery.

Notably, the U.S. Navy’s Lionfish System is based on HII's REMUS 300 UUV and is a highly portable, two-person SUUV with an open architecture design and versatile payload options. In early 2022, REMUS 300 was chosen as the Navy's official program of record for the next-generation SUUV.

The aforementioned discussion surely reflects the proven expertise of HII in the UUV space that is likely to have led to a steady inflow of contracts for the company, like the latest one. This, in turn, should bolster its revenue generation prospects from the UUV product line.

Growth Prospectus

The recent tiff between Ukraine and Russia, and the ongoing unrest in the Middle East have led other nations to strengthen their defense landscape to deter any unprecedented war-like situation. In this context, it is imperative to mention that UUVs are noted for their ability to carry out dangerous maritime operations, such as mine countermeasure missions and harbor patrol. Therefore, as investments in undersea warfare capabilities have recently increased, so has the demand for state-of-the-art UUVs.

Looking ahead, with technological advancement, nations are more rapidly adopting artificial intelligence and machine learning technologies to increase the autonomy of UUVs. As a result, hefty investments in developing and acquiring autonomous marine systems can be expected in the coming days, thereby boosting the UUV market. To this end, the Fortune Business Insights firm projects the global unmanned underwater vehicles market to witness a CAGR of 13.5% during 2023-2030.

Such growth trends should boost Huntington Ingalls along with other defense primes like Boeing (BA - Free Report) , General Dynamics (GD - Free Report) and Lockheed Martin (LMT - Free Report) , which have a strong presence in the unmanned underwater vehicle market.

Boeing’s Echo Voyager is a fully autonomous XLUUV class UUV that can be used for various missions, which were previously impossible due to traditional UUV limitations.

The company’s long-term earnings growth rate is 4%. The Zacks Consensus Estimate for BA’s 2023 sales implies an improvement of 15.7% from the 2022 reported figure.

General Dynamics’ Bluefin SandShark is a one-person-portable, low-cost, autonomous unmanned underwater vehicle designed to leverage today’s miniaturized sensors and emerge as the development platform for the next generation.

General Dynamics boasts a long-term earnings growth rate of 9%. The consensus estimate for GD’s 2023 sales implies an improvement of 9% from the 2022 reported actual.

Lockheed has more than four decades of experience in developing unmanned and robotic systems for the sea. Notably, LMT’s Marlin autonomous underwater vehicle system offers a range of civilian and military customers and a quick and safe way to conduct subsea surveys and inspections.

Lockheed’s long-term earnings growth rate is 8.6%. The stock boasts a four-quarter average earnings surprise of 4.35%.

Price Movement

Shares of HII have rallied 4.6% in the past year against the industry’s decline of 11.4%.

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Zacks Rank

Huntington Ingalls currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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