Northrop Grumman Corporation (NOC) has been awarded a $96 million follow-on contract as part of the Missile Defense National Team to continue development, operations and sustainment work.
The Missile Defense National Team, led by Lockheed Martin Corporation (LMT), is responsible for the Command, Control, Battle Management and Communications (C2BMC) program for the Missile Defense Agency. A crucial component of the U.S. missile defense strategy, the C2BMC program connects and integrates all elements of the nation's ballistic missile defense system.
Under the 38-month contract, as a teammate of Lockheed Martin, Northrop Grumman will support key integrated product teams and provide engineering expertise to further develop, integrate and test C2BMC, operate and sustain existing globally fielded C2BMC assets, and provide test and exercise support for those systems.
Los Angeles-based Northrop Grumman Corporation is one of the largest defense contractors 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, aircraft, space technology and systems integration services.
Northrop Grumman offers a strong program portfolio positioned to take advantage of focus areas in the defense space, an improving balance sheet and an ongoing share repurchase program. However, these are offset by apprehension regarding defense cutbacks on high-cost platform programs, over-exposure to the DoD budget, lower backlog, cost over-runs and reductions in Afghanistan and Iraq operations.
The positive case for Northrop Grumman stems from revenue growth across the board and a broad diversification of programs. The company’s backlog is expected to see further upside in the near future through unmanned aerial vehicle (:UAV) platforms, including Broad Area Maritime Surveillance (:BAMS), Fire Scout and Navy Unmanned Combat Air System (:UCA).
Northrop Grumman’s total order backlog at the end of fiscal 2011 stood at $39.5 billion compared with $46.8 billion at fiscal-end 2010. The lower trend in order backlog is expected to continue in 2012 as some of the prominent programs of the company like the Global Hawk and the F-35 Joint Strike Fighter are coming under the scanner of U.S. budget cuts.
We maintain our long-term ‘Neutral’ recommendation on Northrop Grumman. The quantitative Zacks # 3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.Read the Full Research Report on NOC
More From Zacks.com