Orbital ATK, Inc. (NYSE:OA) announced that it has signed a $48-million contract with U.S. Missile Defense Agency (MDA) Targets and Countermeasures Directorate. It is a follow-on Rocket Motor Technical Services (RMTS) contract. The work will be primarily carried out at Orbital ATK’s Bacchus facility in Magna, UT. The operation will be supported by the company’s other facilities across the country if needed.
Per the contract, the company will provide support for the sustainment of Trident I (C4) and Orion motors, which are used in MDA targets and interceptor vehicles. Orbital ATK also provides specialty support services like radar signature testing and specialty tooling for CASTOR®, Orbus 1A and Oriole motors.
Why Orbital ATK?
Orbital ATK’s diverse product offering and involvement in major development and production programs will boost its order book. In first-quarter 2017, the company received $1,640 million in new firm and option orders. By the end of the quarter, Orbital ATK's firm backlog amounted to nearly $9.8 billion, up 12% year over year. Total backlog (including options, indefinite quantity contracts and undefinitized orders) was approximately $14.8 billion, up 3% year on year.
In May 2017, the company inked a contract with Northrop Grumman (NYSE:NOC) for an initial amount of $90 million. Per the terms, Orbital ATK will supply parts for the B-2 Spirit stealth bomber to the latter. The contract extends for five years. (Read more: : Orbital ATK Gets $90M Deal for B-2 Spirit Stealth Bomber)
Peers in News
Presidents Trump’s proposed 10% hike in fiscal 2018 defense budget from 2016 level has been received positively by the defense industry. Regular inflow of orders has been witnessed from different verticals of the U.S. Defense.
Earlier in July, The Boeing Co. (NYSE:BA) won a contract to provide sustainment engineering and technical support to E-3 Airborne Warning and Control System (AWACS) from the Air Force Life Cycle Management Center, Tinker Air Force Base, OK. (Read more: Boeing Secures $93M Air Force Deal for AWACS Support)
Lockheed Martin Corp.’s (NYSE:LMT) business unit, Aeronautics, secured a $409 million contract for Next Generation Thermal, Power and Controls (NGT-PAC) program. (Read more: Lockheed Martin Unit Wins $409M Contract for NGT-PAC Program)
Price Movement
Year to date, shares of Orbital ATK has returned 14.9%, compared with the Aerospace-Defense Equipment industry’s gain of 13.2% in the same period.
The company’s performance is expected to be driven by diverse product offerings and rising backlog.
Zacks Rank and Key Picks
Orbital ATK currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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