Northrop Grumman Corporation (NOC) has won a $189.2 million modification contract from the U.S. Navy based on which it will use its expertise in engineering and design for building the nation’s newest nuclear-powered aircraft carrier, USS Gerald R. Ford (CVN 78).

The prime contractor as per the award is Northrop’s Shipbuilding sector in Newport News, Virginia.

This modification contract provides for additional design, planning and system integration activities and analysis to support CVN 78 construction.

Named after the 38th president of the United States, Gerald R. Ford (CVN 78) is the first ship of the new Gerald R. Ford class whose keel was laid in November 14, 2009. The Ford class intends to carry the legacy of highly capable U.S. Navy nuclear-powered aircraft carrier ship platforms through such projects.

Enhancements incorporated into the design include flight deck changes, improved weapons handling systems, and a redesigned island, all resulting in increased aircraft sortie rates. It will also include new nuclear power plants; increased electrical power generation capacity; allowance for future technologies; and reduced workload for the sailors, translating to a smaller crew size and reduced operating costs for the Navy.

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. We retain our Neutral recommendation for the stock. The company currently has a Zacks #3 Rank (Hold).

 
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