Northrop Secures $600M In Missile Contract Modification

Northrop Grumman Corp.’s (NYSE:NOC) Space & Mission Systems business unit has secured a modification contract from the missile defense agency to extend the period of performance of task orders. The contract is valued at $600 million. However, with this extension, the total contract value goes up to $3.85 billion from $3.25 billion.

Per this modification contract, Northrop Grumman will continue to provide the agency as well as the Department of Defense (DoD) with enterprise-level technical integration and Ballistic Missile Defense System-(BMDS) level operational integration products and services.

The company will also provide support services, development, and test and evaluation of integrated missile defense capabilities; support warfighters in the exercise of missile defense readiness, wargame command and control procedures, operational concepts, and doctrinal requirements; and provide operational support to the BMDS. Apart from these functions, it will provide information technology (IT) services comprising IT operations, maintenance and infrastructure development in support of the chief information officer.

The contract period has been extended up to 20 months (Jul 31, 2017) beyond the end of the ordering period. The work would be carried out at U.S. Air Force bases in the states of Colorado, Alabama, Hawaii, Virginia, New Mexico, Alaska, Florida and California, per the DoD.

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.

Zacks Rank

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

A few better-ranked stocks in the aerospace and defense space include BAE Systems (LON:BAES) plc BAESY, Engility Holdings, Inc. (NYSE:EGL) and Leidos Holdings, Inc. (NYSE:LDOS) . While BAE Systems carries a Zacks Rank #1 (Strong Buy), Engility and Leidos hold a Zacks Rank #2 (Buy).

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