Radio communication

BAE Systems (BAESY) wins contract for radio communication systems

BAE Systems plcBAESY’s business unit, BAE Systems Technology Solutions and Services, recently entered into a modification contract to provide research and development, engineering, technical support and logistics services in support of the delivery of communications systems. radio. Valued at $32.3 million, the contract is expected to be completed in June 2027.

The agreement was awarded by the aeronautical division of the Naval Air Warfare Center, Patuxent River, MD. The radio communication system is primarily required for installation aboard ships in support of the Naval and Air Integration Warfare Division.

The majority of the work involved in the agreement will be performed in Saint Inigoes, MD.

BAE Systems prospects in radiocommunications

Nations are increasing their spending to strengthen their defense systems. Both developing and developed economies focus on improving their war capabilities by spending on military arsenals and equipment. Hence, the expenditure on effective radio communications that could ensure safe and secure transmission of data is also growing.

The increased demand for an effective tactical communication system that could improve interoperability in the military to carry out various missions gives companies like BAESY an edge.

BAE Systems provides advanced radio frequency communications and data links, military aircraft controls and displays, platform integration, flight control systems, heads-up displays, automatic test and integrated flight control electronics in new generation military aircraft.

Such expertise in effective tactical communication system that could integrate various military platforms has resulted in several contracts for BAE Systems. The latest contract win is proof of that.

Looking ahead, according to the report by research firm Markets and Markets, the global military communications market is expected to grow at a CAGR of 3.4% during the period 2020-2029.

These forecasts highlight huge growth opportunities for companies like BAE Systems. BAESY could continue to enter into agreements with the Marine Corps, involving the radio communication system, thereby increasing its income from communication and control activities.

Peer Perspectives

The bright outlook for the military communications market will benefit not only BAE Systems but also the defense majors, namely:

Lockheed MartinLMT’s Universal Communications System (UCP) commercial platform enables the integration of all types of fixed and mobile radio and data systems, transforming any radio system into a fully IP-based network. The UCP is vendor and equipment independent and can be used with any existing radio and system.

Lockheed Martin’s long-term (three to five years) earnings growth rate is pegged at 3.6%. The Zacks consensus estimate for LMT revenue in 2021 points to a 0.1% improvement over the past 60 days. Lockheed Martin shares returned 4% last year.

L3Harris TechnologiesThe LHX product line includes Tactical SATCOM Terminals, the RO Tactical Radio, and the RO-Mobile Awareness program, which provides fast, global speaking and visual situational awareness capabilities for users in remote locations.

L3Harris Technologies’ long-term earnings growth rate is pegged at 6.5%. LHX shares have returned 17% over the past year.

Northrop GrummanThe NOC Battlefield Airborne Communications Node (BACN) combined with Global Hawk provides combatants with essential information to pursue and defeat the enemy. BACN’s Airborne Executive Processor enables a persistent gateway in the sky that receives, connects, and distributes communication among all participants in a battle.

Northrop Grumman has a long-term earnings growth rate of 8.9%. Zacks’ consensus estimate for NOC’s fourth quarter revenue points to a 0.2% improvement over the past 60 days. Northrop Grumman investors have gained 32.7% over the past year.

Price movement

Over the past year, shares of BAE Systems have risen 6.8% against a 28.5% decline for the industry.

Image source: Zacks Investment Research

Zacks Rank

BAE Systems currently carries a Zacks rank #4 (sell).

You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Lockheed Martin Corporation (LMT): Free Stock Analysis Report

Northrop Grumman Corporation (NOC): Free Stock Analysis Report

Bae Systems PLC (BAESY): Free Stock Analysis Report

L3Harris Technologies Inc (LHX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.