Northrop Grumman Corp.’s (NOC - Free Report) business unit, Northrop Grumman Systems recently secured a modification contract for production and delivery of three MQ-4C Triton unmanned aircraft. The company will also offer associated export compliance support under the terms of the deal.
Valued at $333.4 million, the contract will cater to the government of Australia. The deal, expected to be completed by April 2025, has been awarded by the Naval Air Systems Command, Patuxent River, MD. The majority of the task will be carried out in San Diego and Palmdale, CA; Red Oak, TX and Linthicum, MD.
Advantages of Triton UAS Air Vehicles
Northrop Grumman’s MQ-4C Triton UAS is equipped to provide real-time intelligence, surveillance and reconnaissance (ISR) over vast ocean and coastal regions. The system is also equipped with a robust mission sensor suite that provides 360-degree coverage on all sensors, ensuring unprecedented maritime domain awareness for the U.S. Navy.
Triton UAS supports a wide range of missions including maritime ISR patrol, signals intelligence, search and rescue, and communications relay.
Northrop Grumman’s Prospects
Cost-effectiveness combined with manned aircraft and zero mortality, which UAS offers, has been bolstering demand for military drones. This, in turn, has been driving demand for Triton, a next-generation UAS.
During the 2019-2025 period, the global unmanned aerial vehicle (UAV) market is anticipated to see a CAGR of 15.5% to $45.8 billion (per a report by Markets and Markets research firm). Notably, rise in the procurement of military UAVs by defense forces worldwide is one of the most significant factors, which might provide a boost to the UAV market.
With Northrop Grumman being a prominent defense major and an expert UAV manufacturer, the aforementioned projections for the market should boost this defense prime’s growth substantially.
Other Dominant Players
To date, North America remains the largest market for UAV, driven by increasing use inborder and maritime surveillance activities, particularly in the United States and Canada.
Besides Northrop, defense majors in the country dominating the UAV market space like Boeing (BA - Free Report) and Lockheed Martin (LMT - Free Report) are also poised to benefit. Notably, Boeing’s Insitu unit offers high-performance, low-cost unmanned aircraft systems used for intelligence, surveillance and reconnaissance (ISR). On the other hand, leveraging decades of expertise in low observable technology including the RQ-170, Lockheed’s Skunk Works unit has developed survivable, interoperable next generation unmanned aerial system concepts to support future battlespace operations.
In a year’s time, shares of Northrop Grumman have lost 5.2% compared with the industry’s 30.4% decline.
Zacks Rank & Key Pick
Northrop currently carries a Zacks Rank #4 (Sell).
A better-ranked stock in the same sector is Embraer S.A. (ERJ - Free Report) , which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Embraer delivered a positive earnings surprise of 14.93% in the last reported quarter. The company has a long-term earnings growth rate of 17%.
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