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Harris Secures $284M Satellite Contract Extension From NOAA

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Harris Corporation recently announced that it has secured a $284 million ground segment contract extension from the National Oceanic and Atmospheric Administration (NOAA), for Geostationary Operational Environmental Satellite (GOES) - R Series weather satellites.

Notably, the GOES-R Ground Segment distributes 40 times more data to the National Weather Service. Built by Harris, the GOES-R Ground System processes vast volumes of data. The first and the second satellite in the GOES-R Series launched in 2016 and 2018, respectively, are presently operational.

GOES-R is the latest generation of NOAA’s GOES system of weather satellites, used to detect hurricanes and other natural calamities in the continental United States and western hemisphere. Harris worked closely with the NOAA to successfully complete the installation and verification of the ground segment.

Markedly, the three-year agreement is aimed at modernizing the ground-computing infrastructure and reducing the IT footprint, while laying the foundation for migration to cloud technologies. The move extends the partnership with NOAA’s National Environmental Satellite, Data and Information Service (NESDIS) to 13 years and brings the total contract value to $1.65 billion.

The GOES-R ground segment commands NOAA’s two new geostationary weather satellites, GOES-16 (East) and GOES-17 (West), and will control GOES-T and GOES-U satellites after their launch.

Courtesy of such contract extensions and healthy order wins, particularly from U.S. federal customers, this technology and communications company’s revenues have increased at a compound annual growth rate of 16.7% from fiscal 2015 to fiscal 2018. The momentum is expected to continue on the back of solid growth dynamics.

Harris has long-term EPS growth expectation of 8%. Driven by diligent execution of operational objectives, the stock has recorded an average return of 36.9% compared with the industry’s rise of 23.8% in the year-to-date period.

In addition, owing to strong fiscal third-quarter and year-to-date performance, Harris raised its financial guidance for fiscal 2019. The company expects revenues to be nearly $6.72 billion, up 9% from fiscal 2018 (previously projected 8-8.5% revenue growth). GAAP EPS from continuing operations is anticipated to be about $7.80 (up from the previous guidance range of $7.50 and $7.60). Non-GAAP EPS is estimated to be around $8.15 (up from the previous guidance range of $7.90 and $8.00).

Harris currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the industry include Juniper Networks, Inc. (JNPR - Free Report) , Motorola Solutions, Inc. (MSI - Free Report) and Viasat, Inc. (VSAT - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Juniper has long-term earnings growth expectation of 6.2%.

Motorola has long-term earnings growth expectation of 7.7%.

Viasat has long-term earnings growth expectation of 15.3%.

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