Northrop (NOC) Secures Contract to Aid MQ-4C Triton UAS Program

Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems Corp, recently clinched a modification contract involving its MQ-4C Triton aircraft. The award has been offered by the Naval Air Systems Command, Patuxent River, MD.

Details of the Deal

Valued at $19.3 million, the contract is expected to be completed by May 2024. Per the terms of the deal, Northrop will provide logistics and test support for mission control and operator training systems as well as associated engineering and field service representative technical support to sustain MQ-4C Triton air vehicles.

This contract is aimed at ensuring continued mission-capability for intelligence, surveillance and reconnaissance missions for the U.S. Navy and the Australian government. A major portion of the work related to this deal will be carried out in Patuxent River, MD, and San Diego, CA.

Importance of MQ-4C Triton

Northrop’s MQ-4C Triton is an unmanned aircraft system (UAS) that provides real-time intelligence, surveillance and reconnaissance (ISR) over vast ocean and coastal regions. It also provides unrivalled maritime domain awareness because of its unique mission sensor suite with 360-degree coverage.

Triton is built to support a wide range of missions, including maritime ISR patrol, signals intelligence, search and rescue and communications relay. Such features make it attractive for the military, thereby resulting in NOC winning multiple orders for the same, like the latest one.  During 2023, the company won new awards worth $15.5 billion, including $1.5 billion for Triton, which surely reflects the solid demand that this program enjoys in the global military aviation market.

What’s Ahead?

Increasing geopolitical tensions worldwide, like the Russian invasion of Ukraine as well as the ongoing conflict in the Middle East, have prompted nations to strengthen their defense systems manifold. With rapid technological upgrades, UAS has steadily become pivotal in a nation’s defense strategy.

To this end, per a report by the Market Research Intellect firm, the global Unmanned Combat Aerial Vehicle (UCAV) market is projected to witness a CAGR of 10% during 2024-2031.

Such massive growth projections indicate solid opportunities for NOC, which has a handful of autonomous systems in its product portfolio, like MQ-4C Triton, RQ-4 Global Hawk, NATO Alliance Ground Surveillance, and MQ-8B and MQ-8C Fire Scout. The company is also a leading provider of sustainment, modernization and training services for unmanned aircraft systems for the U.S. military and a broad range of international customers.

Peer Prospects

Considering the solid growth opportunities offered by the global UCAV market, other defense primes like RTX Corp. RTX, BAE Systems PLC BAESY and Lockheed Martin Corp. LMT should also benefit.

RTX’s Coyote UAS is equipped with an advanced seeker and warhead that can successfully identify and eliminate threat UAVs. It is ideal for improved surveillance imagery, enhanced targeting capability, near real-time damage assessment and reduced threat to manned aircraft.

RTX boasts a long-term earnings growth rate of 10.2%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 5.7% from the 2023 reported figure.

BAE Systems’ PHASA-35, an ultra-lightweight, solar-electric High Altitude Pseudo Satellite UAS, completed its successful flight trial in June 2023. It offers an alternative and flexible approach to conventional systems, such as satellites or conventionally powered aircraft for the provision of persistent and cost-effective imagery and communications.

BAESY boasts a long-term earnings growth rate of 12.9%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 34.1% from the 2023 reported figure.

Lockheed Martin has a vast portfolio of autonomous systems, including Automatic Ground Collision Avoidance System, CDL Systems, Indago 3, MORFIUS, Stalker UAS etc. In March 2023, the company’s unit Sikorsky announced the production of a Hybrid-Electric Demonstrator, an uncrewed aircraft, and a fully autonomous hybrid-electric vertical-take-off-and-landing prototype.

LMT boasts a long-term earnings growth rate of 4.2%. The Zacks Consensus Estimate for 2024 sales implies an improvement of 2.4% from the 2023 reported figure.

Price Performance

In the past month, shares of NOC have risen 2.8% compared with the industry’s 0.6% growth.

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Zacks Rank

Northrop currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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