Huntington Ingalls Wins $352M Deal for USS Boise Warship
Huntington Ingalls Industries, Inc. HII recently clinched a modification contract involving the USS Boise (SSN 764) submarine. The deal has been awarded by the Naval Sea Systems Command, Washington, D.C.
Valued at $351.8 million, the contract is scheduled to be completed by May 2023. Per the terms, Huntington will offer continued advance planning, execution services, production and availability preparations for the USS Boise engineered overhaul.
Work related to this deal will be carried out in Newport News, VA.
Growing Demand for SSN & Huntington
Global demand for submarines has increased in recent times, driven by the need for undersea capability enhancement and fleet expansion initiatives undertaken by emerging economies including India and China. Nevertheless, North America still leads the global submarine market’s growth.
Coming to SSN, which is a nuclear-powered attack submarine, it is expected to be the largest segment in the global submarine market driven by several high-value procurement programs worldwide including the U.S. Navy’s Virginia-class procurement.
Notably, the Navy’s force-level goal is to achieve and maintain a 355-ship fleet including 66 SSNs. This clearly reflects the U.S. Navy’s optimism surrounding this class of nuclear submarines.
To further make its fleet even more advance, the U.S. Navy is currently building an advanced model of Virginia-class submarines named the Virginia Payload Module (VPM). This will come with an additional, 84-foot-long, mid-body section equipped with four large-diameter, vertical launch tubes for storing and launching additional Tomahawk missiles or other payloads.
Since Huntington Ingalls remains one of the prime submarine contractors in the nation, the aforementioned developments along with the latest contract win should bode well for this stock.
Looking ahead, per a report by Technavio, the global naval shipbuilding market is expected to reach $14.36 billion during the 2020-2024 period at a CAGR of approximately 3%. This, in turn, is likely to drive demand for various assault ships, including the SSN warships. Huntington Ingalls — being a major shipbuilding giant — should benefit. Other submarine manufacturers like Bae Systems PLC BAESY, Mitsubishi Heavy Industries, Ltd. MHVYF and General Dynamics GD are also likely to benefit.
Price Performance & Zacks Rank
Shares of Huntington Ingalls have lost 32.3% in a year compared with the industry’s decline of 32.6%.
Huntington Ingalls currently carries a Zacks Rank #5 (Strong Sell).
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