Yahoo Finance Northrop Grumman (NOC) Secures an Army Contract for IBCS
Northrop Grumman Corp. NOC recently secured a modification contract for the Integrated Air and Missile Defense Battle Command System (IBCS). The award has been offered by the Army Contracting Command, Redstone Arsenal, AL.
Valued at $49 million, the contract is expected to be completed by Mar 31, 2025. The work related to this deal will be executed at Huntsville, AL. The contract includes foreign military sales to Poland.
What’s Favoring Northrop?
Missile defense plays a pivotal role in a nation’s defense strategy. Nations are thus reinforcing their military capabilities to strengthen their defense structure in the growing threat environment. To this end, it is imperative to mention that Northrop Grumman’s IBCS is the centerpiece of the U.S. Army’s modernization strategy for air and missile defense capability.
Notably, the company pioneered the development of integrated battle command solutions and interoperable defense systems. The solid demand for NOC’s IBCS can be gauged from the fact that IBCS seamlessly fused data from a Lower Tier Air and Missile Defense Sensor to acquire, track, engage and intercept a long-range cruise missile surrogate with a PAC-3 Missile Segment Enhancement during a recent test event held at White Sands Missile Range in New Mexico, in April.
Naturally, being a prominent defense contractor, the company frequently wins contracts involving notable missile defense products like IBCS. The latest contract win is an example.
Growth Prospects
The global peace index reflects an unstable environment worldwide with the Russia-Ukraine war continuing for more than two years now, in addition to the ongoing hostility prevalent in different parts of the Middle East. This has set the stage for the defense sector to witness rising demand for military products, particularly missiles, as nations worldwide strive to protect their borders from unprecedented attacks.
This should bode well for the missile industry, as evident from the Mordor Intelligence firm’s report, which estimates the missile and missile defense systems market to witness a CAGR of 5% over the 2024-2029 period.
NOC’s proficiency in missile manufacturing positions it favorably to capitalize on such market growth opportunities. Its product portfolio includes the Guided Multiple Launch Rocket System propulsion and warhead subsystems, the Hypersonic Attack Cruise Missile, the Advanced Anti-Radiation Guided Missile and a few other combat-proven products that support missile defense systems.
Peer Opportunities
Apart from NOC, other major missile makers like RTX Corp. RTX, Lockheed Martin LMT and General Dynamics GD are also expected to benefit from the aforementioned prospects of the missile and missile defense market.
RTX’s business unit, Missiles and Defense, is a prominent U.S. missile maker. Its portfolio includes the AIM-9X Sidewinder missile, the AIM-9X Block II missile and the RAM-guided missile weapon system.
RTX boasts a long-term earnings growth rate of 10.3%. The Zacks Consensus Estimate for its 2024 sales indicates an improvement of 6.2% from the 2023 reported figure.
Lockheed’s Missiles and Fire Control unit provides combat-proven air and missile defense systems as well as tactical missiles. These include Joint Air-to-Surface Standoff Missile, Long Range Anti-Ship Missile, Multiple Launch Rocket System and a few more missile programs.
LMT boasts a long-term earnings growth rate of 4.2%. The consensus estimate for its 2024 sales indicates an improvement of 3.2% from the 2023 reported figure.
General Dynamics’ Ordnance and Tactical Systems is the system integrator of the 2.75-inch Hydra-70 family of rockets. It also produces composite rocket motor cases and launch tubes for tactical and strategic missiles.
GD has a long-term earnings growth rate of 11%. The Zacks Consensus Estimate for General Dynamics’ 2024 sales indicates an improvement of 10.5% from the 2023 reported figure.
Price Performance
Shares of Northrop Grumman have gained 6.5% over a year against the industry’s 7.7% decline.
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Zacks Rank
Northrop Grumman currently carries 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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