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Northrop Grumman (NOC) Unit Wins $82M Deal to Aid Triton UAS

Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems Corp., recently clinched a contract to support MQ-4C Triton unmanned aircraft systems (UAS). The deal has been awarded by the Naval Air Systems Command, Patuxent River, MD.

Valued at $82 million, the contract is projected to be completed by March 2022. Per the deal terms, Northrop Grumman Systems will offer sustainment, engineering, logistics, test, mission control and operator training systems support for MQ-4C Triton UAS. The contract will serve the U.S. Navy and Australian army.

The majority of work related to this deal will be executed in Patuxent River, MD and San Diego, CA.

Why 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 equipped with a robust mission sensor suite that provides 360-degree coverage on all sensors, ensuring unprecedented maritime domain awareness for the U.S. Navy.

Triton UAS supports a wide range of missions including maritime ISR patrol, signals intelligence, search and rescue, along with communications relay.

Northrop Grumman’s Prospects

Cost effectiveness combined with manned aircraft and zero mortality, which UAS offers, has been bolstering demand for military drones. This, in turn, has been driving demand for Triton, a next-generation UAS. The latest contract win is a bright example of the same.

According to Fortune Business Insights’ projection, during the 2020-2027 period, the global unmanned aerial vehicle (UAV) market is anticipated to see a CAGR of 12.2% and reach $25.13 billion. Rise in the procurement of military UAVs by defense forces worldwide is one of the most significant factors, which should provide a boost to the UAV market.

With Northrop Grumman being a prominent defense major and an expert UAV manufacturer, the aforementioned market potential should substantially boost this defense prime’s growth.

Other Dominant Players

To date, North America remains the largest market for UAV, driven by increasing use inborder and maritime surveillance activities, particularly in the United States and Canada.  

Considering the impressive prospects that the global UAV market boasts, it is imperative to mention that in addition to Northrop, there are other defense majors in the country that dominate the UAV market space including Boeing BA and Lockheed Martin LMT. Boeing’s Insitu unit offers high-performance, low-cost unmanned aircraft systems used for ISR. Conversely, 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.

No doubt, the UAV market’s growth potential will benefit the aforementioned defense contractors in the coming days.

Price Performance

In a year’s time, shares of Northrop Grumman have lost 5.4% against the industry’s 41% gain.

Zacks Rank & Key Pick  

Northrop currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same sector is Triumph Group TGI, which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Triumph delivered an earnings surprise of 228.6% in the last reported quarter. The company boasts a long-term earnings growth rate of 2.6%.

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