Northrop Grumman Corp.’s NOC business unit, Northrop Grumman Systems Corp. recently won a contract to repair 174 B-52 Engine Nose Cowls for the B-52 Stratofortress Bomber jet. The contract was awarded by the Air Force Sustainment Center, Tinker Air Force Base, OK.
Valued at $36 million, the contract is scheduled to get completed by July 2021.Work related to the deal will be executed in Lake Charles, LA.
Rising Demand for Combat Jets
With rising security threats across the globe, emerging economies like Asia Pacific, the Middle East and South America are spending a lot on enhancing their defense arsenals. On the other hand, developed nations like the United States and Europe have already been leading the defense market.
It is imperative to mention in this context that military aircraft, both manned and unmanned, forms an integral part of a country’s defense products. Notably, emerging trends in the combat aircraft space like the advent of fifth-generation technology aircraft, advanced composite materials, and stealth technology have been driving demand substantially.
What’s Favoring Northrop Grumman?
The global military market continues to expand, with North America leading its growth. Notably, in support of the National Defense Strategy, the U.S. Air Force must purchase 72 combat jets each year.
Being a major jet maker in the United States, Northrop Grumman thus enjoys a smooth flow of contracts for military jets and its associated upgrades.The latest contract win is an example ofthe same. Notably, Northrop’s Technology Services unit is a leader in delivering engineering services like cowling. Due to Boeing BA B-52’s high mission-capable rate, large payload, long range, persistence and ability to employ both nuclear and conventional precision standoff weapons, B-52 continues to be a critical contributor to the U.S. National Security Strategy. Given the growing demand for combat jets like B-52, we may expect, Northrop to win more contracts in the future related to upgrade of these jets.
Prospects of Other Jet Manufacturers
Per a report by Fortune Business Insights, the global military aircraft market is expected to witness a CAGR of 3.1% to reach a value of $58.03 billion by 2026 from 2018. Since North America continues to dominate this market, jet makers in the nation like Boeing, Lockheed Martin LMT, General Dynamics GD and Northrop Grumman are expected to benefit in terms of steady order flows for their combat-proven aircraft and associated repair and up gradation jobs.
Price Performance
In a year’s time, shares of Northrop have declined 11.8% compared with the industry’s plunge of 24.3%.
Zacks Rank
Northrop currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
(We are reissuing this article to correct a mistake. The original article, issued on July 16, 2020, should no longer be relied upon.)
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