Northrop Grumman Corporation (NOC) has been awarded a $64 million contract by the U.K. Ministry of Defence to design and develop an upgraded airborne defense system to be used for the Airborne Warning and Control System aircraft.
The airborne defense system to be upgraded known as the Identification Friend or Foe Interrogator program is used by the Royal Air Force Air Command at Waddington, a base in Lincolnshire, England. It provides a long-range, early warning and detection capability that aids in discriminating friendly from hostile forces.
Work will be performed under Northrop Grumman’s existing Sentry support program. It will be the largest program modification that the company has carried out so far for the Sentry aircraft fleet. The work will be carried out at RAF Waddington, U.K. as well as at Northrop Grumman’s facilities in Herndon, Virginia; Warner Robins, Georgia; and Melbourne, Florida.
Los Angeles-based Northrop Grumman is one of the world’s leading shipbuilders and the second largest defense contractor in the U.S. The company supplies a broad array of products and services to the U.S. Department of Defense (DoD), including electronic systems, information technology, submarines and surface ships, aircraft, space technology and systems integration services.
Northrop’s future outlook remains largely secure based on expectations of solid revenue growth across the board, a broad diversification of programs, strong order bookings and an order backlog of more than $64.6 billion at the end of third quarter 2010.
However, apprehensions regarding defense cutbacks on high-cost platform programs, over-exposure to the DoD budget, lower backlog, cost over-runs and substantial exposure to missile defense-related programs keep us on the sidelines.
Also going forward The National Commission on Fiscal Responsibility and Reform recently recommended $100 billion cut in defense budget by fiscal 2015. This will hamper future order booking of all companies in the defense space in general and Northrop Grumman in particular.
Northrop Grumman mainly competes with Empresa Brasileira de Aeron (ERJ), General Dynamics Corporation (GD) and The Boeing Company (BA). We currently have a Neutral recommendation on the Zacks #3 Rank stock.
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
Zacks Investment Research
