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Northrop Grumman (NOC) Wins $116M U.S. Military Contract

Zacks Equity Research

Northrop Grumman Corporation (NOC) has won a contract worth $116 million for upgrading the AN/AAQ-28(V) LITENING targeting pods for the U.S. military.

Per the contract, Northrop will upgrade and provide spares to the AN/AAQ-28(V) LITENING targeting pods for the Air Force, Air Force Reserve, Air National Guard and Marine Corps.

This indefinite delivery, indefinite quantity contract will enhance all Air Force Block 1 pods to the G4 configuration. This will complete the transformation of the service to the latest edition of the LITENING system.

This upgrade will improve the range, resolution and identification capability of the pods to a great extent.

The AN/AAQ-28(V) LITENING pod is a multisensor targeting and surveillance system, enabling the detection, acquisition and identification of targets at very long ranges by the pilots. Delivery of weapons is thus carried out with utmost precision.

Northrop has delivered over 700 units of LITENING pods to the Marine Corps, several components of the U.S. Air Force and multiple international customers. The AN/AAQ-28(V) LITENING pod has witnessed demand from countries like Israel, Spain, Italy, Australia and Denmark.

Moreover, the AN/AAQ-28(V) LITENING pod has covered more than 650,000 combat flight hours till date, confirming its popularity and reliability.

Northrop’s focus on research and innovation is commendable. Its big contract wins speak volumes of its technical expertise.

In Nov, 2014, it received a $306 million contract from the U.S. Department of Defense (DoD) for the support of the RQ-4 Global Hawk drone. In Oct, 2014, it won a record $207.3 million modification contract from the DoD for the acquisition of four Ground/Air Task-Oriented Radar (G/ATOR) low-rate initial production systems. In Sep 2014, Northrop was awarded with a whopping $354 million contract by the U.S. DoD to increase its fleet of RQ-4 Global Hawk unmanned aircraft system and bring in additional multi-intelligence capabilities.

Despite these big ticket wins, the threat of sequestration still looms large over the company, adversely impacting its top line. Northrop reported revenues of $5.98 billion in the third quarter of 2014, down nearly 2% from the year-ago quarter.

Northrop currently holds a Zacks Rank #3 (Hold). Some well-placed stocks in the same industry include The Boeing Co. (BA), General Dynamics Corp. (GD) and Engility Holdings, Inc. (EGL). All these stocks carry a Zacks Rank #2 (Buy).

Read the Full Research Report on NOC
Read the Full Research Report on BA
Read the Full Research Report on GD
Read the Full Research Report on EGL


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