Northrop Gets $113.7M DoD Contract - Analyst Blog
22 Mai 2013 - 11:40PM
Zacks
Northrop Grumman Corporation (NOC) numbered
among the 20 awardees receiving contracts from the Department of
Defense (DoD). The Northrop contract for $113.7 million calls for
Full Rate Production of five E-2D Advanced Hawkeye Lot 2 airborne
early warning aircrafts. In total, the DoD has provided contracts
worth $717.7 million.
Under this advance acquisition fixed price contract Northrop will
be financed for purchase of long-lead materials that are required
to begin full production of these aircrafts. The task is expected
to be completed by Mar 2014.
In Feb 2013, Northrop Grumman received approval from the Office of
the Secretary of Defense (“OSD”) for full-rate production as the
aircraft has proved to be suitable and effective for
operations.
Designed and manufactured by Northrop Grumman, the E-2D Advanced
Hawkeye is the newest variant of the E-2 aircraft platform. It
comprises of high-tech radar with a two-generation leap. It also
has an upgraded aircraft system that increases speed. The Advanced
Hawkeye manages the Navy's warplanes by recognizing and keeping
track of wanted and unwanted aircrafts while warning the seaborne
fleet.
E-2D is a multi-mission platform. Through its ability to coordinate
concurrent missions, E-2D can provide land force support, rescue
operations, and manage a reliable communications network between
widely dispersed nodes. Hawkeye’s new glass cockpit and tactical
fourth operator display provide the five-person crew more
flexibility in fulfilling the diversified nature of work. Moreover,
its ability to work near the coastline as well as over land helps
in protecting the nation’s interests.
Northrop has a strong presence in Air Force, Space & Cyber
Security programs. The company’s product line is well positioned in
high priority categories, such as defense electronics, unmanned
aircraft and missile defense. The company is taking several
initiatives to ensure further alignment with its customers' need in
order to increase affordability and cost competitiveness. It is
working on establishing Aerospace Design Centers of Excellence at
its various centers. Going forward, growth in domestic efforts will
be driven by the Navy's Triton program with international growth
supported by Alliance Ground Surveillance (“AGS”) program and
continuing efforts on Germany's EURO HAWK program.
Also, the company seems to be immune to some extent to defense
budget cuts. In fact, the President's fiscal year 2014 budget
supports some of Northrop’s key programs. For 2014, the proposed
budget increased funding for Northrop’s E-2D Advanced Hawkeye by
25%, while 21 EA-18G Growlers funding got a proposal for double
financing in comparison to 2013. Meanwhile funding for F-35 was
re-affirmed, and programs like SBIRS, Advanced EHF and the James
Webb Space Telescope, Global Hawk Block 30 and Block 40 operations
were sufficiently funded. Cybersecurity is a key investment area
with funding increasing by more than 20% to $4.7 billion.
The company presently retains a short-term Zacks Rank #2 (Buy).
Other stocks to consider are Erickson Air-Crane
Inc. (EAC), Wesco Aircraft Holdings, Inc.
(WAIR) and B/E Aerospace Inc. (BEAV). While
Erickson Air-Crane carries a Zacks Rank #1 (Strong Buy), Wesco
Aircraft and B/E Aerospace carry a Zacks Rank #2 (Buy).
B/E AEROSPACE (BEAV): Free Stock Analysis Report
ERICKSON AIR-CR (EAC): Free Stock Analysis Report
NORTHROP GRUMMN (NOC): Free Stock Analysis Report
WESCO AIRCRAFT (WAIR): Free Stock Analysis Report
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