Northrop Grumman Corp. (NOC) secured a big award from the U.S. Air Force, worth $963.5 million, for the support of Minuteman III Intercontinental Ballistic Missile or ICBM Ground Subsystems. This is a significant win for Northrop Grumman as it edged out defense major The Boeing Co. (BA), which has 55 long years of experience in ICBM development. Boeing too had competed for the support contract.
Per this five-year indefinite delivery/indefinite quantity contract, Northrop Grumman will provide program management support, engineering services and emergency response to the U.S. Air Force. The task comprises weapon system analyses, system and subsystems assessment, and technical advisement and assistance to the ICBM Systems Directorate on ground systems-related programs, risk management and mitigation.
The work will be performed at Hill Air Force Base, UT; Omaha, NV; Vandenberg Air Force Base, CA; and San Bernardino, CA. With completion due for Jan 31, 2020, the contract has an initial value of $4.4 million.
Meanwhile, Boeing has requested a debrief. It will decide on whether to protest the contract award following a full briefing from the Air Force.
Northrop Grumman has been serving the country for over 50 years on the U.S. ballistic missile program. A world-class integrator of complex, mission-critical system and networks, Northrop Grumman has played a pivotal role in shaping the aerospace and defense industry, ensuring the security, surety and reliability of the nation's ICBM weapon system.
The defense sector has on the whole been hit hard by sequestration. Sales at Northrop Grumman’s Technical Services unit dipped 3.1% year over year to $0.7 billion in the third quarter 2014 due to reduced volume, partially offset by higher international sales.
In this climate of dwindling sales the latest win is a major positive for Northrop Grumman. The company is scheduled to report its fourth quarter as well as full year 2014 results on Jan 29, 2015. The Zacks Consensus Estimate is pegged at $2.21, reflecting an estimated 10.6% year-over-year increase.
Northrop Grumman holds a Zacks Rank #2 (Buy). Other equally well-placed stocks in the aerospace and defense sector include General Dynamics Corp. (GD) and Huntington Ingalls Industries, Inc. (HII).
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