Lead defense contractor Northrop Grumman Corporation NOC has secured a combined order worth $111 million for providing hardware and support for its Large Aircraft Infrared Countermeasure (“LAIRCM”) system. The latest order is a modification of a previously awarded fixed-price contract from the U.S. Air Force.
Per the modification contract, Northrop Grumman will provide additional transmitters, missile warning sensors, processors, lasers, control interface units and supporting equipment to the U.S. Air Force as well as international customers through Apr 2017.
The LAIRCM system is essential for the safety of onboard troops in a hostile situation. The system’s technology is designed to detect a missile launch automatically, determine its threat level, and activate a high-intensity laser-based countermeasure to track and engage the missile.
With rising security threats, the U.S. government has realized the need for intelligence, surveillance and reconnaissance (“ISR”) technologies and thus shifted its focus toward high-tech intelligence equipment. The FY16 defense budget proposed by the Obama administration put due emphasis on ISR. Accordingly, Northrop recently announced a restructure of its business in order to focus on its space and airborne ISR business. This timely shift in focus toward ISR technologies will allow the company to witness significant gains, going forward.
Northrop continues to win contracts from the Pentagon at frequent intervals. Owing to the infallibility of the LAIRCM system, the company secured a similar contract in Apr 2015 worth $105 million (read more: Northrop Gets $105M Contract for LAIRCM Missile Defense).
Northrop Grumman currently carries a Zacks Rank #2 (Buy). Other stocks to consider in this space are TransDigm Group Incorporated TDG, Orbital ATK, Inc. OA, both sporting a Zacks Rank #1 (Strong Buy) and General Dynamics Corporation GD carrying a Zacks Rank #2.
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