Despite the current stalemate in the U.S. economy, which has
restricted defense contract flows,
Northrop Grumman Corp.
) emerged as one of the key winners. Northrop's shares inched up
1.37% to close at $98.68 on Oct 16, 2013 thanks to the company's
foreign military sales contract win from the French
The $34 million contract awarded via the U.S. Navy involves
modernizing military hardware which includes the installation of
AN/APX-122A IFF Mode 5/Mode S Interrogators and AN/APX-123 IFF
Mode 5/Mode S Transponders on board three French navy E-2C
"Hawkeye" airborne early warning aircraft.
The mode transponders provided by Northrop will enhance the
aircraft's Identification Friend or Foe ("IFF") system and will
improve communications with the U.S. Navy's E-2D Advanced Hawkeye
aircraft. The IFF technology allows aircraft to identify friendly
forces thereby preventing any casualties from friendly
Apart from the U.S., France is the only country which operates
E-2C Hawkeye from an aircraft carrier. The long-standing
operational collaboration between the U.S. and France has ensured
the relevancy of the multimission E-2 Hawkeye platform in battle.
The joint effort has contributed to constant technological
developments of the E-2 Hawkeye which has optimized its
reliability and capability.
Northrop has been the one of the few contractors to
effectively counter the sequestration. In late Sep 2013, the
company scored ten contracts from the Department of Defense worth
In addition, Northrop is devoting its efforts to capitalize on
the rising demand for defense products, especially in the Middle
East and the Asia-Pacific markets. Recently, Northrop expanded
its footprint in Australia through multiple acquisitions and
We believe these endeavors will likely keep the company's top
line stable in the coming years. Currently, Northrop carries a
Zacks Rank #2 (Buy).
Besides Northrop, other well-placed defense operators are
Zacks Ranked #2
Lockheed Martin Corp.
Erickson Air-Crane Inc.
B/E Aerospace Inc.
B/E AEROSPACE (BEAV): Free Stock Analysis
ERICKSON AIR-CR (EAC): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
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