Northrop Wins $45M Deal to Deliver Avionics for Helicopters

Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems Corp. recently won a modification contract involving UH-1Y and AH-1Z helicopters. The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.

Valued at $44.6 million, the contract is scheduled to be completed by December 2023. In particular, this modification will increase the ceiling of the contract for the production and delivery of an additional 228 H-1 Tech Refresh Mission Computers to support UH-1Y and AH-1Z.

Majority of the work related to this deal will be executed in Salt Lake City, UT.

Growing Helicopter Demand

A rapid increase in terror attacks has compelled nations to strengthen their arsenal and bump up defense budget. With the United States being the largest exporter of defense equipment across the world, the nation enjoys a steady flow of contracts for its combat-proven weaponries from both Pentagon and its foreign allies. With military jets and helicopters constituting a major portion of a nation’s armaments, there is a steady flow of contracts for these weaponries.

Now, AH-1Z and UH-1Y are two combat-proven helicopters manufactured by Textron’s TXT Bell business segment. With Bell’s copters capturing a major share of the military helicopter space, thanks to their advanced mission capabilities, the AH-1Z and UH-1Y models enjoy a decent demand drive across the globe.

Notably, Bell AH-1Z’s Target Sight System provides the longest range and highest accuracy of any helicopter sight in the world. On the other hand, sharing 85% commonality with the AH-1Z, the Bell UH-1Y is the only utility helicopter built to simplify maintenance, training, and supply efforts. The unique features of these helicopters have made them all the more desirable in the U.S. helicopter market.

Northrop & Avionics

Northrop’s Tech Refresh Mission Computer integrates advanced mission, weapons and video processing capabilities into a conduction-cooled, high-performance airborne computer capable of driving four independent, multi-function displays.Dual mission computers are central to Northrop Grumman’s Integrated Avionics System (IAS) that powers the UH-1Y utility and AH-1Z attack helicopter cockpits.

Notably, Northrop Grumman’s mission computers have been used in H-1 helicopters since the upgrade program’s inception in 1997, making the mission computers a safe, combat-proven and mature solution.
As demand for such combat proven helicopters is on the rise, making these helicopters all the more advanced by incorporating its state-of-the art avionics systems will surely enable Northrop Grumman to clinch more notable contracts, like the latest one, in the coming days.

Price Movement   

Northrop’s stock has lost 6.2% in the past year compared to the industry’s decline of 28.3%.

Zacks Rank & Key Picks

Northrop currently carries a Zacks Rank #3 (Hold).

A few better-ranked companies in the same sector are Teledyne Technologies TDY and Ducommun Inc. DCO, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Teledyne delivered average earnings surprise of 11.7% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved up 4.8% to $9.75 in the past 90 days.

Ducommun came up with average earnings surprise of 60.22% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has increased 18.5% to $2.18 in the past 90 days.

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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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