Orbital ATK (OA) Clinches MJU-73/B Countermeasures Deal

Orbital ATK, Inc. OA, a leading aerospace and defense company,  won a contract from the United States Air Force for the initial production of spectrally matched aircraft countermeasure, MJU-73/B.

This pyrotechnic device is capable of protecting warfighter jets from infrared missiles. MJU-73/B mimics the ‘heat' signature of an aircraft to lure away potential missile threats, thereby increasing the chances of its survivability. Orbital ATK was awarded the deal based on an impressive performance by MJU-73/B against a variety of infrared missile threats.

Of late, Orbital ATK has been focused on developing and testing countermeasure devices. This is evident from its expenditure of $24.7 million on research and development in the second quarter of 2015, reflecting a 375% year-over-year increase.

Over the past week, Orbital ATK has clinched two big-ticket contracts. One of these is a military tank ammunition contract worth $16 million, while the other, a domestic and international ammunition contract, is valued at $105 million.

The $105 million medium- and large-caliber ammunition order will be used for multiple U.S. and allied services for air, sea and land weapons platforms. The order includes a range of 20, 25 and 30mm tactical and target practice ammunition along with the 120mm tactical and training ammunition for the Abrams Main Battle Tank (read: Orbital ATK Wins Medium & Large Caliber Ammunition Order).

However, the declining trend of the U.S. defense budget is a major cause of concern for aerospace and defense companies that rely on contracts from the U.S Department of Defense. In order to combat the budget austerity and grow profitably in this scenario, defense companies have resorted to several strategies. The top players are expanding their operations through acquisitions and foreign orders, with foreign sales as a key driver of top-line growth. Another strategy is to drastically cut down cost of operations in order to maintain margins in the tough business environment.

Zacks Rank

Orbital ATK currently has a Zacks Rank #3 (Hold). Some better-ranked aerospace and defense stocks include LMI Aerospace Inc. LMIA, Lockheed Martin Corporation LMT and General Dynamics Corporation GD. All three stocks carry a Zacks Rank #2 (Buy).

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