Northrop's (NOC) Arm Wins Deal to Support F-16 Aircraft
Northrop Grumman Corporation’s NOC business unit, Northrop Grumman Systems Corp., recently clinched a contract to support the F-16 aircraft. Valued at $189.8 million, the contract is projected to be completed in December 2024.
Details of the Deal
The modification contract was awarded by Air Force Life Cycle Management Center, Wright Patterson Air Force Base, OH. The deal involves the production of 83 Active Electronically Scanned Array (AESA) radars for Air Force’s F-16 aircraft as well as its associated spares. The majority of the work will be carried out in Linthicum Heights, MD.
Importance of AESA Radar
Northrop Grumman has been leading in AESA innovations for more than six decades. Its AESA fire control radars help to provide air-to-air, air-to-ground, land and sea superiority for the armed forces. Also, Northrop Grumman has been focusing on providing improved advanced designs to not only increase mission capability but also reduce costs.
Moreover, NOC’s airborne radars provide through-the-weather strategic and tactical surveillance. Operating in SAR (Synthetic Aperture Radar), Ground Moving Target Indicator, Maritime Moving Target Indicator and Dismount Moving Target Indicator modes, Northrop Grumman’s advanced AESA radars give commanders the intel they need in today’s multi-domain operations.
Growth Prospects
Countries globally have been reinforcing their military resources due to intense geopolitical tensions and amplified terrorist threats. This has spurred demand for an efficient radar system. The ramped-up demand provides growth opportunities to defense giants like Northrop Grumman, which focuses on manufacturing complex and technologically advanced radar systems. This, in turn, results in frequent contract wins that aid the company’s growth.
Per a report from the Research and Markets firm, the global military radars market is projected to witness a CAGR of 4.4% through 2025. Hence, huge demand for military radars globally might boost the growth of defense majors manufacturing radars. As one of the leading defense giants in the United States, such growth opportunities provide a good platform for Northrop and boost its revenues from the radars arena.
To reap the benefits of the immense growth opportunities in radar system, other defense majors who have forayed into the radar system market are Lockheed Martin LMT, Raytheon Technologies RTX and L3 Harris LHX
Lockheed Martin’s radars are designed with the highest degree of commonality and fully integrated systems. They can operate in all environments, are available in highly mobile configurations and are deployed in more than 45 nations in six continents.
The Zacks Consensus Estimate for Lockheed Martin’s 2021 earnings per share indicates growth of 2.4% from the prior-year figure. Its long-term earnings (three to five years) growth rate stands at 3.56%. LMT’s shares have returned 2.4% in the past three months.
In October 2021, Raytheon Missiles & Defense introduced a medium-range radar for the National Advanced Surface-to-Air Missile System, with an extended range and altitude coverage. The new radar, known as GhostEye MR, is a variant of the company’s GhostEye, Raytheon’s new name for its Lower Tier Air and Missile Defense Sensor under development for the U.S. Army.
The long-term growth rate of Raytheon Technologies is pegged at 13.16%. Shares of RTX have returned 18.1% in the past year.
L3 Harris’ TASR not only delivers full airspace control for terminal ATC (Air Traffic Control) requirements but also enhances the overall air picture by using the radar, Automatic Dependent Surveillance-Broadcast and secondary surveillance radar data.
The long-term growth rate of L3 Harris is pegged at 6.44%. LHX’s shares have rallied 12.3% in the past year.
Price Movement
In the past year, shares of Northrop Grumman have rallied 26.8% against the industry’s decline of 32.4%.
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Zacks Rank
Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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