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Northrop (NOC) Wins $97M Deal to Support MQ-4C Triton UAS

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Northrop Grumman Corp.’s (NOC - Free Report) business unit, Northrop Grumman System Corp., recently won a modification contract involving MQ-4C Triton air vehicles. The Naval Air Systems Command, Patuxent River, MD has awarded the deal.

Details of the Deal

Valued at $97.3 million, the contract is projected to be completed by March 2023. Per the terms of the deal, Northrop will be involved in providing continued test, maintenance, logistics and sustainment engineering support for MQ-4C Triton air vehicles, mission control and operator training systems.

Through this modification, Northrop will also offer continued field service representatives technical support to ensure that the MQ-4C Triton unmanned aerial system (UAS) aircraft are mission-capable for intelligence, surveillance and reconnaissance missions supporting aircraft early operational capability and initial operating capability.

The contract will serve the U.S. Navy and the Australian government. The majority of the work related to this deal will be executed in Patuxent River, MD and San Diego, CA.

Benefits of MQ-4C Triton UAS

Northrop Grumman’s MQ-4C Triton UAS is equipped to provide real-time intelligence, surveillance and reconnaissance (ISR) over vast ocean and coastal regions. The system is also integrated with a robust mission sensor suite that provides 360-degree coverage on all sensors, ensuring unprecedented maritime domain awareness of the U.S. Navy.

Triton UAS supports a wide range of missions including maritime ISR patrol, signal intelligence, search and rescue, and communications relay. All these factors keep Triton in demand among defense forces.

Growth Prospects

UAS has been gaining importance lately owing to its cost-effectiveness compared to manned aircraft and zero mortality rate. This has resulted in a huge demand for Northrop Grumman’s MQ-4C Triton. The aforementioned deal is a testament to the fact.

Per a report from Research and Markets firm, the military segment of the global unmanned aerial vehicle (UAV) market is projected to witness a CAGR of 9% from 2021-2026. Such massive demand for military UAVs globally may provide a boost to the growth of defense majors manufacturing UAVs.

It is worth mentioning that Northrop Grumman, being an expert in UAV manufacturing, has immense growth prospects in the UAV arena. The latest contract win is a testament to that which should boost NOC’s revenues in the coming days.

Will Peers Benefit?

Apart from Northrop Grumman, other defense majors who will benefit from the growing UAV market are Boeing (BA - Free Report) , Lockheed Martin (LMT - Free Report) and Textron (TXT - Free Report) .

Boeing’s Insitu unit offers high-performance, low-cost unmanned aircraft systems used for ISR. Notably, its MQ-25 unmanned aircraft system brings the right combination of refueling, autonomy, and seamless carrier deck integration to meet the U.S. Navy’s goals.

Boeing boasts a long-term earnings growth rate of 4%. The Zacks Consensus Estimate for BA’s 2022 earnings indicates an improvement of 137.2% over 2021’s reported figure.

Leveraging decades of expertise in low observable technology including the RQ-170, Lockheed’s Skunk Works unit has developed survivable, interoperable next-generation unmanned aerial system concepts to support future battlespace operations. Some of its notable UAS includes MQM-105 Aquila, Polecat, RQ-3 DarkStar and D-21.

Lockheed boasts a long-term earnings growth rate of 5.7%. The Zacks Consensus Estimate for LMT’s 2022 earnings implies an improvement of 18.4% over 2021’s reported figure.

Textron’s business unit, Textron Systems’ multi-mission-capable UAS includes the Shadow Tactical UAS, the Aerosonde Small UAS with available Aerosonde HQ vertical-takeoff-and-landing kit and the next-generation NIGHTWARDEN Tactical UAS.

Textron has a long-term earnings growth rate of 11.8%. The Zacks Consensus Estimate for TXT’s 2022 earnings suggests an improvement of 21.8% over 2021’s reported figure.

Price Movement

In the past year, shares of Northrop Grumman have gained 42.7% against the industry’s decline of 36.1%.

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Zacks Rank

Northrop 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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