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Alliant Receives $32M Contract

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Alliant Techsystems Inc. (ATK) has received a contract, worth $32 Million, from the United States Air Force to deliver 30mm tactical PGU-13 ammunition and 30mm training PGU-15 ammunition. Per the agreement, the company’s Armament Systems division will roll out the deliveries from its Allegheny Ballistics Laboratory in West Virginia and New River Energetics facilities in Radford, Virginia. The supply of ammunitions is expected to start from March 2013.

Alliant’s series of 30mm ammunition provides cost-effective, ballistic-matched training rounds for improved war-fighter performance. This PGU series cartridge is specially produced for training purposes. It is used as ammunition for the 30mm GAU-8/A gatling gun for the U.S. Air Force’s A-10 Thunderbolt close-support aircrafts.

The company is a prime PGU-13 and PGU-15 ammunition provider to the U.S. Air Force's A-10 aircrafts. This product has a major role to play in training for the A-10 aircrews for boosting their air-to-ground combat skills. The company continues its support to the U.S. forces by delivering superior quality products, strong value and an equally high level of customer service.

The PGU-13 ammunition is used in air-to-ground and close-air support functions to strike light aims at widened ranges. This ammunition has been largely used to offer close air support. However, PGU-15 target practice rounds provide live-training environment for the crews.

Arlington, Virginia-based Alliant Techsystems Inc. provides aerospace and defense products to the U.S. government agencies. The company also supplies ammunition and related accessories to law enforcement agencies and commercial customers. With a market capitalization of $1.84 billion, Alliant has 17,000 full time employees. The company competes with Rockwell Collins Inc. (COL) and Elbit Systems Ltd. (ESLT).

Alliant is expected to release its second-quarter of fiscal-year 2013 results on November 1, 2012 before the market opens. The Zacks Consensus Estimates for second-quarter and fiscal-year 2013 are currently pegged at $1.46 and 7.15 per share, respectively.

As we know that Alliant’s two biggest customers are the U.S. Department of Defense and the National Aeronautics and Space Administration, the expected U.S. defense budget cutbacks could limit the future growth prospects of the company. In addition, higher degree of competition from a number of players in each of its business area is also our concern.

Alliant Techsystems Inc. currently has a short-term Zacks #4 Rank (Sell rating).

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