Northrop Grumman Corp.
) has received a contract worth $28 million to act as a mission
package integrator and provide engineering and production
planning services for the Navy's surface warfare and mine
countermeasures mission module components. These module
components will be deployed from and integrated into the littoral
combat ship ("LCS").
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Lockheed Martin Corp.
General Dynamics Corp.
), LCS is a fast, highly maneuverable, networked surface combat
ship. Per the contract, Northrop Grumman will provide a specific
set of subsystems such as data processing equipment and vehicles
and sensors to the Navy.
As per the mission package, the company will integrate manned and
unmanned systems that are capable of operating in all domains
whether air, surface or subsurface. Acting as a mission package
integrator, the company will continue to provide systems
engineering, mission module production and mission package fleet
sustainment. The package includes distance support for the
currently deployed USS Freedom (LCS 1).
Northrop Grumman as a mission package integrator maintains a
disciplined systems engineering process and ensures that the
different components are effectively integrated into the larger
To date, Northrop Grumman has delivered two surface warfare
mission modules. Also, the company will deliver its first mine
countermeasures mission module for LCS very soon. The second mine
countermeasures mission module is also under production.
Northrop Grumman's product line is well positioned in high
priority categories, such as defense electronics, unmanned
aircraft and missile defense. We expect revenue and earnings
growth to be driven by its strong presence in the current focus
areas of cyber security, modernization of defense and homeland
security assets, intelligence, surveillance and reconnaissance
systems, advanced electronics and software development.
However, we remain concerned about the defense cutbacks on
high-cost platform programs, over-exposure to the Department of
Defense budget, cost over-runs and reductions in Afghanistan and
Iraq operations. The company presently retains a short-term Zacks
Rank #3 (Hold).
In the near term, we would advise investors to accumulate its
short-term Zacks Rank #1 (Strong Buy) peer
Erickson Air-Crane Inc.