Northrop Wins Defense Contract of $93.1M for Spy Drones
Defense contractor Northrop Grumman Corporation NOC won a contract from the U.S. Defense Advanced Research Projects Agency (“DARPA”) for the Tactically Exploited Reconnaissance Node (Tern) program, Phase III, worth $93.1 million.
Per the contract, Northrop will manufacture a medium-altitude, full-scale demonstrator of a new unmanned spy drone with a flying wing having large counter-rotating propellers, which will be able to take off from and land on destroyers and frigates. Work is expected to be complete by Nov 2017.
Drones are unmanned aircraft intelligence, surveillance and reconnaissance (“ISR”) systems capable of flying high altitudes and long hours. They are usually armed with missiles. These aircraft require no onboard human pilot and the operator runs the vehicle from a remote terminal. Use of drones help protect lives of pilots.
For several years, Northrop has been working on the design of a new drone under the Tern program, led by the U.S. Navy's Office of Naval Research and DARPA. Navy officials needed an unmanned aerial system capable of carrying out ISR missions from smaller warships. However, current drones are incapable of taking off from and landing on confined spaces at sea and then staying airborne extensively. Unmanned aircraft is thus gaining importance in 21st century warfare as well as for reconnaissance and surveillance flights.
Earlier this month, Northrop discussed the design concept of the Tern program with reporters and demonstrated a proposed model with a 40-feet flying wing which can land and take off while sitting down on its tail and then tilting to fly with the front rotors.
During the 1950s, the Navy had designed a ship-based fighter named Convair XFY-1 Pogo for providing ships with air support. It however failed to pass the prototype stage.
Northrop Grumman is the fourth largest U.S. defense contractor in terms of 2014 revenue, with a major platform-centric focus. The company has a strong presence in the Air Force, and Space & Cyber Security programs. Northrop’s product line is well positioned in high-priority categories, such as, defense electronics, unmanned aircraft and missile defense.
Northrop's product innovation and focus on strengthening its ISR wing will help maintain a stable earnings stream in light of the changing needs of the defense landscape. It also increased its profit outlook for 2015.
Zacks Rank
Northrop currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the aerospace and defense sector include Leidos Holdings, Inc. LDOS, General Dynamics Corporation GD and Huntington Ingalls Industries, Inc. HII. While Leidos sports a Zacks Rank #1 (Strong Buy), both General Dynamics and Huntington Ingalls carry a Zacks Rank #2 (Buy).
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