Northrop Grumman Corporation’s NOC arm, Space Systems, recently secured a modification contract involving Next-Generation Overhead Persistent Infrared (“OPIR”) Polar Space Vehicles 1 and 2. Space Systems Command, Los Angeles Air Force Base, CA, has awarded the deal.
Valued at $42.8 million, the contract is scheduled to be completed by Jul 31, 2026. The latest modification deal brings the total cumulative face value of the contract to $1.98 billion. The work related to the deal will be executed at Redondo Beach, CA.
What’s Favoring Northrop Grumman?
A strong defense structure acts as a deterrent against potential threats. The need to strengthen a nation’s defense structure has thrived the demand for technologically advanced orbital assets strategically designed for missile interception and recognition. In such a scenario, NOC’s technologically advanced products act as a cornerstone for military surveillance.
Northrop’s OPIR polar-orbiting satellites, known as NextGen Polar (NGP), operate in highly-elliptical orbits and enhance the missile-warning mission into a more capable next generation. Their modernized sensors provide excellent coverage of the entire northern hemisphere and are fitted with new resiliency features to stay in the fight in contested scenarios. NGP’s enhanced communication system allows to transmit wide-band OPIR data to the ground.
Such advanced technology in detecting emerging missile threats assists the company in witnessing a steady inflow of orders, like the latest one. This should boost the revenue generation prospects of NOC from the Space Systems business unit.
Growth Prospects
Per a report published by Mordor Intelligence, the military satellite market is projected to witness a CAGR of 6% during the 2023-2028 period. This should benefit Northrop and prominent defense majors like The Boeing Company BA, Lockheed Martin LMT and Raytheon Technologies RTX that are engaged in offering satellite surveillance.
Boeing delivers satellite and ground solutions that support government customers’ national security operations, including intelligence, surveillance, reconnaissance and communications. The company is the prime contractor for the X-37B Orbital Test Vehicle — the most advanced un-crewed re-entry spacecraft used by the U.S. Department of the Air Force to perform risk-reduction and experimentation for reusable space vehicle technologies.
Boeing has a long-term earnings growth rate of 4%. Its investors have gained 54.8% in the past month.
Raytheon provides end-to-end space solutions, ranging from ground control systems to on-orbit sensors to keep customers informed and ahead of the threat. Its Future Operationally Resilient Ground Evolution Mission Data Processing Application Framework generates warnings, alerts and other information for combatants.
The long-term growth rate of Raytheon is projected at 8.3%. Its shares have increased 2.8% in the past year.
Lockheed Martin uses cutting-edge technologies to build capabilities that comprise layered defense systems, from missile defense to directed energy and hypersonic capabilities. Its Mobile User Objective System offers secure ultra-high-frequency satellite communications for mobile forces, whereas its latest Space Based Infrared System satellite plays a critical role in detecting missile threats and improving resiliency against attacks for the United States.
Lockheed boasts a long-term earnings growth rate of 6.2%. Shares of LMT have increased 9.4% in the past year.
Price Movement
In the past year, shares of Northrop Grumman have decreased 4.9% compared with the industry’s decline of 0.4%.
Image Source: Zacks Investment Research
Zacks Rank
Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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