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Northrop Grumman Corporation NOC recently secured a $481.3 million contract for providing updates and improvements to the Integrated Air and Missile Defense Battle Command System's software. The award has been provided by the Army Contracting Command, Redstone Arsenal, AL.
The work related to this contract will be performed in McLean, VA; Huntsville, AL; Linthicum Heights, MD; and Orlando, FL. The contract involves foreign military sales to Poland.
What’s Favoring NOC Stock?
Rising military conflicts, terrorism and border disputes have led nations to increase their focus on national security, particularly on missile defense systems in recent times, backed by the rapid development of advanced missile technologies over the last decade.
This is likely to have prompted the Mordor Intelligence firm to forecast a compound annual growth rate of 5% for the global missiles and missile defense systems market during the 2024-2029 time period.
Such strong growth projections indicate solid opportunities for Northrop Grumman, which develops and builds advanced missile defense technology, ranging from command systems to directed energy weapons, advanced munitions and powerful sensors. Notably, NOC’s IBCS serves as the centerpiece of the U.S. Army's air and missile defense modernization strategy and thus enjoys a solid demand in the missile and missile defense systems market. The recent contract is an example of that.
Opportunities for Other Defense Stocks
Other defense companies that are likely to enjoy the perks of the expanding missiles and missile system market have been discussed below.
RTX Corporation RTX: It is known for its missile defense systems like the Patriot and SM-6, which are in high demand globally. RTX also provides advanced sensors and interceptors to identify, track and defeat threats as part of a layered missile defense.
The company’s long-term (three to five years) earnings growth rate is 10.2%. The Zacks Consensus Estimate for RTX’s 2024 sales indicates year-over-year growth of 7.2%.
The Boeing Company BA: It manufactures various missile defense systems, including the Ground-based Midcourse Defense, Aegis Ballistic Missile Defense and Avenger. Boeing-built air and missile defense systems have been protecting its customers for nearly 25 years against threats ranging from intercontinental ballistic missiles to hostile aircraft.
The company has a long-term earnings growth rate of 19.3%. The Zacks Consensus Estimate for BA’s 2025 sales indicates year-over-year growth of 22.5%.
Lockheed Martin Corporation LMT: Lockheed Martin’s renowned missile program includes the Patriot Advanced Capability-3 and Terminal High-Altitude Area Defense air and missile defense programs. It also manufactures the Multiple Launch Rocket System, the Joint Air-to-Surface Standoff Missile and Javelin tactical missile programs alongside other tactical missiles.
The company has a long-term earnings growth rate of 4.5%. The Zacks Consensus Estimate for LMT’s 2024 sales indicates year-over-year growth of 5.5%.