Northrop Grumman Corporation’s NOC business unit, Northrop Grumman Systems Corp., recently clinched a modification contract for the Surface Electronic Warfare Improvement Program (“SEWIP”) Block 3 full-rate production. Valued at $31.8 million, the contract is projected to be completed by September 2025.
Details of the Deal
The modification contract was awarded by the Naval Sea Systems Command, Washington, D.C. The deal involves the delivery of spare parts to support SEWIP Program Block 3 full-rate production. The work will be carried out at multiple locations, with the majority of it to be accomplished in Baltimore, MD.
Importance of SEWIP Block 3
The rising threat of missile attacks has been fueling the demand for an effective electronic attack system that excels in defeating inbound threats.
In this context, Northrop Grumman’s SEWIP enjoys significant demand as it boasts features that protect surface ships from anti-ship missiles, providing early detection, signal analysis and threat warning. NOC’s SEWIP is an upgrade to the legacy AN/SLQ-32 system, and provides game-changing capability for non-kinetic electronic attack options to the U.S. fleet.
Such advantages of the electronic warfare system make it attractive for military, thus resulting in NOC winning orders for the same, like the latest one. This, in turn, is likely to boost the revenue-generation prospects of the company from the SEWIP electronic warfare system.
Countries globally have been reinforcing their military resources due to intense geopolitical tensions and amplified terrorist threats. To this end, an effective electronic warfare system that ensures anti-missile solution features is likely to witness a pent-up demand.
Per a report from the GlobalNewsWire firm, the global electronic warfare system market is projected to witness a CAGR of 6.2% through 2028. Such growth prospects may benefit Northrop Grumman as its SEWIP Block 3 product already has an established position in the electronic warfare system market.
The abounding growth prospects should also benefit defense majors who have forayed into the laser-based countermeasure system like Lockheed Martin LMT, L3Harris Technologies LHX and General Dynamcis GD.
Lockheed Martin’s Advanced Off-Board Electronic Warfare (“AOEW”) program delivers persistent electronic surveillance and attack capability against naval threats like anti-ship missile (ASM). Its AOEW Active Mission Payload AN/ALQ-248 system is a self-contained electronic warfare pod hosted by the MH-60R or MH-60S Seahawk helicopter, which provides the Navy with advanced ASM detection and response capabilities.
Lockheed Martin’s long-term earnings growth rate is pegged at 5.5%. Shares of LMT have returned 15.9% value to investors in the past year.
L3Harris’ Viper Shield all-digital electronic warfare suite is custom designed to be a baseline on advanced F-16 Block 70/72 aircraft and maximize their survivability and mission success. Some of its other product range include AN/ALQ-161A, AN / ALQ-211 CV-22, NH 90, AND F-16 self-protection system, AN / ALQ-214 (IDECM) F/A-18 countermeasure system, etc.
The long-term growth rate of L3Harris is pegged at 3.3%. The Zacks Consensus Estimate for LHX 2022 earnings suggests growth of 3.9% from the prior-year reported figure.
Since many years, General Dynamics has been performing as the Lead Systems Integrator for SEWIP Block 1. Its SEWIP, a spiral-block development program, provides an immediate improvement for the legacy surface ship electronic warfare detection and countermeasure system, the AN/SLQ-32.
General Dynamics boasts a long-term earnings growth rate of 10.2%. GD stock has appreciated 12.5% in the past year.
In the past year, shares of Northrop Grumman have rallied 34.3% against the industry’s decline of 19.8%.
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Northrop Grumman currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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