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Northrop Wins $219M Air Force Deal - Analyst Blog

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Defense major Northrop Grumman Corp. ( NOC ) succeeded in clinching one of the largest contracts awarded on Sep 9, 2013 by the U.S. Department of Defense (DOD). Of the total $7.42 billion worth of contracts awarded yesterday, Northrop won a $219.1 million firm-fixed and cost-type contract from the U.S. Air Force for follow-on production of its Joint Threat Emitter ("JTE"). The work on the latest contract is slated to be finished by Mar 2016.

This is a partial foreign military sales contract that allows Northrop to manufacture JTE and related drawings, technical orders, retrofit kits and software for Air Force pilots. JTE is a multi-threat, high-fidelity simulator with enhanced multi-functional threat potential that can be economically reconfigured to simulate emerging threats globally.

It can realistically simulate multiple types of surface-to-air missile (SAM) and anti-aircraft artillery (AAA) radar systems and also perfectly simulate enemy integrated air defense systems to train combat aircrew to defeat or avoid SAM and AAA threats in a war-like training environment.

Despite the threat of budget sequestration, the defense primes have experienced a generous flow of large as well as small-sized contracts. The positive case for Northrop stems from revenue growth across the board, a broad diversification of programs, and an order backlog of approximately $37.7 billion at the end of second quarter 2013.

Again, Northrop might profit from the current Syrian conflict as President Obama's stand for a military strike against Syria is increasingly garnering support from both Republican and Democratic parties. Additionally, Japan's proposed increase in its defense budget in 2014 might prove to be a boon for Northrop as the country is a key customer.

Presently, Northrop carries a Zacks Rank #2 (Buy). Other well-placed players in the sector are Lockheed Martin Corp . ( LMT ), Raytheon Co. ( RTN ) and B/E Aerospace, Inc. ( BEAV ), all with a Zacks Rank #2 (Buy).

B/E AEROSPACE (BEAV): Free Stock Analysis Report

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

NORTHROP GRUMMN (NOC): Free Stock Analysis Report

RAYTHEON CO (RTN): Free Stock Analysis Report

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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.


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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