Alliant Techsystems Inc.
) has entered into a firm-fixed price five-year Indefinite
Delivery/Indefinite Quantity (IDIQ) contract with the U.S. Navy
to deliver 30mm x 173mm, MK266 High Explosive Incendiary with
Trace Cartridges in MK15 Linked Belts. The agreement authorizes
the initial funding of roughly $12 million and has the maximum
potential value of $41 million. Alliant's Defense Group will be
responsible for this contract.
Per the agreement, Alliant will provide 30mm x 173mm ammunitions
to the U.S. Navy. The company will roll out the deliveries from
its Allegheny Ballistics Laboratory facility in Rocket Center at
W. Va. and New River Energetics facility in Radford, Va. The
deliveries are expected to start from 2014 and will be over by
Alliant's series of 30mm x 173mm ammunition provides
cost-effective, anti-personnel, and armor-piercing training
rounds for improved war-fighter performance. In addition, these
ammunitions offer exceptional accuracy, lethality and necessary
penetration to overcome the threats on the battlefield. The MK266
is an alteration to the PGU-13 High Explosive Incendiary 30mm
round along with the addition of a tracer. It is installed at the
MK46 Mod 2 Gun Weapon System of the U.S. Navy's San Antonio class
Landing Platform Dock ships and Littoral Combat Ships.
Alliant plays a significant role to meet the U.S. defense
establishment's demand for the small and medium caliber
ammunitions. Till date, the company has supplied roughly 200
million rounds of 30 mm GAU-8 ammunitions to the armed forces.
In December last year, the company had received a similar kind of
IDIQ contract, worth $75 million, from Department of Justice and
Federal Bureau of Investigation to deliver .40 caliber
We consider these kinds of small ticket-size deals further
strengthen Alliant's ongoing alliance with different government
However, we believe that any further U.S. defense budget cutback
could limit the company's future growth prospects. In addition,
the higher degree of competition from a number of players in each
of Alliant's business segments is also our concern.
Considering positive and negative factors, we prefer Alliant
Techsystems Inc. to have a Zacks Rank #2 (Buy). Other stocks from
the industry we presently prefer are Zacks Ranked #1 (Strong Buy)
Rockwell Collins Inc.
) with Zacks Rank #2 (Buy).
Arlington, Virginia-based Alliant Techsystems Inc. provides
aerospace and defense products to the U.S. government agencies.
The company also supplies ammunition and related accessories to
law enforcement agencies and commercial customers.
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