Northrop Grumman Wins U.S. Navy BAMS-D Support Contract

Northrop Grumman Corp. (NYSE:NOC) has received a contract from the U.S. Navy for support services of the Broad Area Maritime Surveillance-Demonstrator (“BAMS-D”) program. This is a modification contract valued at $62.4 million.

The contract entails Northrop Grumman to exercise an option for operation and maintenance services in support of the BAMS-D project. Additionally, the company will provide logistics support, organization, intermediate, and depot level maintenance, and field services representatives to ensure the BAMS-D aircraft is mission-capable for intelligence, surveillance, and reconnaissance missions. BAMS-D is presently testing the RQ-4 Triton UAV.

Fiscal 2016 operations and maintenance (Navy) overseas contingency operations fund will be used for the contract. Work under the contract is slated for completion in Jun 2017.

Northrop Grumman, with a major platform-centric focus, is the fourth largest U.S. defense contractor (following The Boeing Company (NYSE:BA), Lockheed Martin Corporation (NYSE:LMT) and General Dynamics (NYSE:GD)) in terms of 2015 revenues. The company has a strong presence in Air Force, Space & Cyber Security programs. Its product line is well positioned in high priority categories, such as, defense electronics, unmanned aircraft and missile defense.

Owing to the government's strategy of strengthening its existing defense systems, defense giants are scoring some sizeable contracts in recent times.

We appreciate the initiatives being taken by Northrop Grumman to boost its order flow. It continues to invest heavily in research and development (“R&D”), which increased over 25% in 2015 to $712 million. These initiatives will ensure increased affordability and cost competitiveness, driving its top line.

Currently, Northrop Grumman has a Zacks Rank #3 (Hold).

Zacks Rank

A few better-ranked stocks in the aerospace and defense space include BAE Systems (LON:BAES) plc (OTC:BAESY) , CAE Inc. (TO:CAE) and Esterline Technologies Corp. (NYSE:ESL) . While BAE Systems carries a Zacks Rank #1 (Strong Buy), CAE and Esterline Technologies hold a Zacks Rank #2 (Buy).

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