Northrop Grumman Corp.
) received a foreign military sales ("FMS") contract to supply
the latest generation of F-16 targeting radar to several
associates. This firm-fixed-price deal has a ceiling value of
Per the contract, the company's Electronic Business unit will
deliver 16 AN/APG-68 (V)9 multimode fire control radar systems to
the Royal Thai Air Force and 22 units of the same radar system to
the Republic of Iraq. Moreover, the company is responsible for
supplying auxiliary parts to the Egyptian Air Force, the Royal
Moroccan Air Force, and the Pakistan Air Force. The company
expects the work to be completed by Dec 20, 2017.
Northrop's AN/APG-68 (V)9 system is utilized for addressing
air-to-air and air-to-surface threats aboard F-16 fighter jets.
The AN/APG-68 (V)9 is considered to have 33% greater range in
comparison to the radar systems earlier used aboard the F-16. Its
light weighted systems consume less power, and cost between 25%
and 45% less than the legacy F-16 fire control radars.
Northrop has a strong presence in Air Force, Space & Cyber
Security programs. The company's product line is well positioned
in high priority categories, such as defense electronics,
unmanned aircraft and missile defense. The company is the fourth
largest U.S. defense contractor behind
The Boeing Company
Lockheed Martin Corp.
General Dynamics Corp.
) in terms of full year 2012 revenue.
The company's backlog, which stood at approximately $39.4 billion
at the end of the first quarter of 2013, is expected to see
further upside in the near future through its strong focus areas
of cyber security, modernization of defense and homeland security
assets, intelligence, surveillance and reconnaissance systems,
advanced electronics and software development. Additionally, the
proposed 25% increase in Northrop's funding in the 2014 budget
would encourage future opportunities.
Although Northrop Grumman like its peers faces uncertainty
related to the defense budget, it seems to be immune to some
extent to defense budget cuts. The company presently retains a
short-term Zacks Rank #2 (Buy).
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