Northrop Grumman Corp.
) clinched a $114.0 million U.S. Air Force contract for building
three additional high-flying RQ-4 Global Hawk unmanned aircraft
systems ("UAS") and associated sensors. The contract is expected
to run through 2015.
The deal entails procurement of long lead items related to
three Block 30 aircraft which include three advanced integrated
sensor suites, three airborne signals intelligence payload
("ASIP") as well as the installation of two ASIP retrofit kits on
previously acquired aircraft.
The intelligence, surveillance and reconnaissance (ISR)
aircraft enables the military to receive high-resolution imagery,
survey vast geographic regions and identify ground targets.
The Global Hawk has the ability to fly for long periods at
altitudes of up to 60,000 feet and is suitable to take on diverse
ISR missions. The Global Hawk is designed to carry varied
payloads and also offer airborne communication and information
sharing assistance to military forces under challenging
Besides the military, Global Hawk's ISR application has shown
promising results in other fields too. The National Aeronautics
and Space Administration has employed Global Hawks in scientific
and environmental research endeavors like the study on tropical
storms over the Atlantic Ocean.
The current defense budget allows continued investment in key
technologies aimed at enhancing the country's future defense
capabilities including ISR systems. Thus, the Global Hawk is
expected to feature largely in the Department of Defense's
acquisition plans. The aircraft procurement program was allotted
$45.4 billion in the 2014 budget, marginally less than the
previous fiscal year.
We believe Northrop's diversified business will continue to
fetch high-value contracts in the upcoming quarter. The company
recently secured a sizeable $178 million contract for the
sustainment of the entire E-8C Joint Surveillance Target Attack
Radar System aircraft program.
With the U.S. focused on addressing the growing issues of
counter terrorism worldwide, we anticipate Northrop's order book
to improve next year. Currently, the company carries a Zacks Rank
Other defense operators looking good at the moment include
Zacks Ranked #1 (Strong Buy)
) and Zacks Ranked #2
Lockheed Martin Corp.
The Boeing Co.
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