The U.S. Navy will this week announce whether Northrop Grumman (NOC) or Boeing (BA) will build its next-generation carrier-based stealth fighter, a contract that is expected to be worth hundreds of billions of dollars over its lifetime.
According to Reuters, sources familiar with the process, a decision on the F/A-XX program, which will replace the Navy’s F/A-18E/F Super Hornet fleet, could be made in the coming days.
For NOC it would be its first fighter contract since the F-14 Tomcat, famous for its role in the original Top Gun movie but retired in 2006.
It comes after the Senate on Monday voted to confirm John Phelan, Rugger Management LLC founder and a major Trump campaign donor, as the next Navy secretary.
LMT Out, NOC and BA in Two-Horse Race
Lockheed Martin (LMT), Northrop Grumman and Boeing all submitted proposals and prototypes for the Navy’s sixth-generation fighter jet program, which is seen as essential to the U.S.’s ability to counter China in the Indo-Pacific region over the coming decades.
NOC and BA are thought to be the frontrunners after Reuters reported on March 4th that Lockheed Martin had been eliminated from the competition, though the Navy did not confirm this report. LMT had been top dog in the fifth-generation fighter program with its F-35 Joint Strike Fighter and the F-22 Raptor, but technical problems and the soaring cost of the program – estimated at $2 trillion potentially over its lifetime – has left doubters.
Boeing, which has been hit by all kinds of problems lately from labor strikes to build quality issues, was given a boost last week after it won the Air Force’s F-47 contract. As far as carrier credentials go, it already makes the MQ-25 carrier-based uncrewed refueling aircraft.
But NOC has pedigree with stealth aircraft, having made the B-2 and B-21 stealth bombers.
In January, the U.S. Navy awarded Northrop a $3.5 billion contract to conduct the mission-systems integration for the E-130J, which will be the successor to the E-6B Mercury for the Take Charge and Move Out (TACAMO) mission, central to the U.S. nuclear deterrent.
The first fighter jets of the new crop are expected to enter service in the 2030s, with the current F/A-18s likely to remain in service for a while after that.
Is NOC a Good Stock to Buy?
NOC has a Moderate Buy consensus rating based on nine Buys, eight Holds and no Sells. The average NOC price target of $542.77 implies about 10% upside.
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