(NOC) Northrop Grumman Earns Air Force Contract

Northrop Grumman Corporation (NOC) has received an 18-month, direct standalone contract, worth $8.1 million, for the production of millicomputer replacement (‘’MCR’’) 1553 processors from the U.S. Air Force.

The MCR-1553 will replace a vintage processor. Aging milliprocessor and core memory in the U.S. Air Force ALQ-131 electronic countermeasures pod that is used on both the F-16 Fighting Falcon and the A-10 Thunderbolt will be replaced by the MCR-1553. MCR-1553 has an onboard memory for in-flight data recording and provides Ethernet communications for advanced interface with other systems on the host aircraft.

The MCR-1553 provides a quantum leap in processing and communication capability needed for current and future threat requirements for the ALQ-131. It has the technical ability to sustain critical electronic attack systems and has advanced capabilities to meet evolving sophisticated threats.

Northrop Grumman 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. The company is supported by favorable projected revenue, diversified revenue and earnings streams with strong growth potential.

However, the positives are wont to be offset by apprehension regarding defense cutbacks on high-cost platform programs, over-exposure to the DoD budget, lower backlog, cost over-runs and substantial exposure to missile-defense-related programs.

The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peer like Embraer SA (ERJ).

Los Angeles-based Northrop Grumman is a leading global security company providing innovative systems, products and solutions in aerospace, electronics, information systems, and technical services to government and commercial customers worldwide. Northrop Grumman, in March 2011, separated its Shipbuilding segment through a spin-off of its subsidiary, Huntington Ingalls Industries Inc. (HII). It operates major shipyards in Louisiana, Mississippi and Virginia.

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