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Science Applications (SAIC) Secures US Navy's Torpedo Contract

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Science Applications International (SAIC - Free Report) secured a five-year contract from the U.S. Navy worth $80.5 million. SAIC is set to complete the designing, production and deployment of the MK 710 Torpedo System Test Sets (TSTS) for the U.S. Navy’s MK 48 heavyweight torpedoes used in the latter’s submarine force.

SAIC will supply MK 710 TSTS, which will be utilized to test and ensure the reliability and functionality of MK 48 heavyweight torpedoes before the solutions are handed over to the Navy. The U.S. Navy will use these tests and validations for training, developing tactics and certifying torpedo upgrades.

This is the third contract from the U.S. Navy for SAIC in 2024. The first contract includes a $375 million deal for Modern Vehicle Fielding Integration and Support and another agreement focuses on the U.S. Navy’s Hypersonics Advanced Concepts and Strategic Missions Programs.

In 2023, SAIC secured multiple contracts from the U.S. Navy, including deals for Software Development and Engineering support for Naval Air Systems Command. Other deals include a contract to support the U.S. Navy’s Torpedo Production and Naval Air Warfare Center Weapons Division Instrumentation Platform and another agreement for the Navy’s Tactical Networks.

Government Contracts to Aid Top-Line Growth

Science Applications continues to prioritize the federal government market and aims to increase its market presence. In 2021, 2022 and 2023, 98% of SAIC's total revenues came from contracts with the U.S. government. The company’s main clients include various government agencies, such as Homeland Security, NASA and the Department of State, as well as military branches like the Navy, Airforce and Army.

Having the Navy and other government agencies as major clients stabilizes the business and minimizes revenue fluctuations. Also, the government projects, once sanctioned, generate revenues for several years, adding to the predictability of future revenue streams.

Science Application also benefits from the higher spending as proposed in the latest federal government budget. The increased budget is expected to accelerate the pace of contract awards, which, in turn, will be beneficial for SAIC’s top-line growth.

Zacks Rank and Other Stocks to Consider

Currently, Science Applications carries a Zacks Rank #2 (Buy). SAIC shares have gained 23.7% in the past year.

Some other top-ranked stocks from the broader technology sector are BlackLine (BL - Free Report) , Arista Networks (ANET - Free Report) and Dell Technologies (DELL - Free Report) . BlackLine sports a Zacks Rank #1 (Strong Buy), and ANET and DELL carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BlackLine’s fourth-quarter 2023 earnings has been revised by a penny northward to 55 cents per share in the past 60 days. Shares of BL have lost 15.2% in the past year.

The Zacks Consensus Estimate for Arista’s fourth-quarter 2023 earnings has been revised by a penny northward to $1.71 per share in the past seven days. Shares of ANET have rallied 107.7% in the past year.

The Zacks Consensus Estimate for DELL fourth-quarter 2024 earnings per share has been revised northward by a penny to $1.73 in the past 30 days. Shares of DELL have surged 98.6% in the past year.

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