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L3 Technologies Wins $392M Deal for Night Vision Binocular

Zacks

L3 Technologies, Inc. LLL recently secured a hybrid contract worth $391.8 million for procurement of enhanced night vision goggle, binocular. Work related to the deal is scheduled to be over by May 2, 2021.

The contract was awarded by the U.S. Army Contracting Command, Aberdeen Proving Ground, Maryland. Per the terms of the agreement, locations and funding for the task will be determined with each order.

A Brief Note on Night Vision Binocular

L3 Technologies’ binocular night vision device (BNVD) is a compact, lightweight, third-generation dual-tube goggle with an ergonomic low-profile design and offers superior situational awareness compared to a single-tube goggle.


Notably, BNVD has been developed based on the company’s battle-proven AN/PVS-15 night vision binocular which enables increased survivability.

The BNVD's twin-tube design provides protection in the field against failure or damage versus a single-tube night vision goggle. It can be used as a monocular when needed.

The company’s BNVD was designed to increase system resolution, significantly reduce head-borne weight, improve system center of gravity, provide additional operational utility and improve overall situational awareness as compared to currently fielded dual-tube goggles.

Our View

Growing concern for nation security has increased adoption of night vision devices from military & defense sectors across the world. Per a report from Reuters, night vision goggle segment is set to acquire the largest market share of night vision devices, between 2016 and 2022.

With North America leading the night vision device market during the forecast period, it is imperative to mention that L3 Technologies enjoys a leading position in night vision equipment. However, in the past few quarters, the company has been witnessing fewer deliveries of enhanced night vision goggle products to the U.S. Army as contracts near completion.

Now that the company has won a new contract for BNVD, its Sensor Systems segment can be expected to see a significant top-line growth in the second quarter of 2018.

In February 2018, President Trump proposed a fiscal 2019 defense budget that aims at spending $716 billion on national security. Notably, with this increased defense spending proposal President Trump, intended at rebuilding the U.S. military into a more capable, lethal, and geared up Joint Force. We believe the aforementioned contract win is an instance for such intentions and may expect L3 Technologies to win more such contracts in days ahead, as the U.S. government works on realizing its dream for a more lethal military.

Price Performance

Shares of L3 Technologies have rallied about 19.9% in a year against h the broader industry’s 2.9% decline. The outperformance may have been driven by the company’s growth in commercial aviation market.

Zacks Rank & Other Key Picks

L3 Technologies currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the same sector are AeroVironment AVAV, Boeing BA and Wesco Aircraft Holdings WAIR. While AeroVironment sports a Zacks Rank #1 (Strong Buy), Boeing and Wesco Aircraft carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AeroVironment recorded an average positive earnings surprise of 147.43% in the last four quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has risen by 10 cents to $1.00 in the past 60 days.

Boeing recorded an average positive earnings surprise of 29.51% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 56 cents to $14.61 in the past 60 days.

Wesco Aircraft recorded a positive earnings surprise of 29.41% in the last reported quarter. The Zacks Consensus Estimate for 2018 earnings has risen by 4 cents to 74 cents in the past 60 days.

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