Why the Orbital (ASX:OEC) share price ended the day up 6%

The Orbital Corporation Ltd (ASX: OEC) share price flew almost 7% higher in afternoon trade following a new agreement. Here's the details.

| More on:
asx share price represented by high tech computing space satellite pictured floating above earth in space

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Orbital Corporation Ltd (ASX: OEC) share price flew higher in late-afternoon trade following the announcement of a new agreement. At the end of today's market session, the advanced aerospace manufacturer's shares finished at 93.5 cents, up 6.8%.

What's lifted the Orbital share price?

Investors were picking up the Orbital share price throughout the day after announcing a lucrative deal.

According to its release, Orbital advised it has signed an engine development and supply agreement with Textron subsidiary, Lycoming Engines.

Under the framework, Orbital will engage in a 12-month engine development program to integrate its technology into Textron Systems' Aerosonde platform. This will see Orbital's use the design of its unmanned aerial vehicle (UAV) core engine, including its patented fuel and engine control systems.

Textron subsidiary, Textron Systems is a leading international firm specialising in unmanned aircraft systems. The company is one of the largest suppliers of tactical UAVs to the United Stated military.

Once all checkpoints have been successfully met, the agreement will transition into a supply contract. Orbital will deliver the newly-integrated engines along with spare parts and support services to Lycoming over a minimum 5-year period. At the end of the contract, Lycoming has the option to renew the deal for an additional five one-year extensions. Delivery of the production engines is expected to be no earlier than the fourth quarter of FY22.

Orbital noted that its revenue guidance for the current financial year remains the same, between $30 million to $40 million. However, future revenue guidance cannot be determined until the successful completion of the engine development program, and known scheduling engine deliveries.

What did management say?

Orbital UAV CEO and managing director Todd Alder commented:

We are delighted to announce this major new collaboration with Lycoming and to be working with Textron Systems on a joint development program.

This relationship further enhances our status within the global UAV defence industry and provides the opportunity to increase our market share and deliver on our strategic growth objectives

Textron Systems, senior vice president of air systems Wayne Prender went on to add:

For more than four decades, Textron Systems has been designing, manufacturing, operating and supporting some of the world's most reliable and trusted multi-mission unmanned aircraft, including the Aerosonde and Shadow systems.

Orbital UAV's heavy fuel technology and design expertise coupled with Lycoming Engines' World Class reputation further supports Textron Systems' industry-leading UAV mission readiness rates and reputation for reliability and durability.

The Orbital share price has gained over 100% in the past 12 months, but has fallen 20% year-to-date.

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Orbital Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Young girl drinking milk showing off muscles.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a great end to the trading week for ASX investors today.

Read more »

Hands reaching high for a trophy with a sunset in the background.
Record Highs

The ASX 200 Index is on its way to another all-time high today. Here's why

These blue chip stocks are driving the index towards a new record today...

Read more »

Group of friends trading stocks on their phones. symbolising the 3 most traded ASX 200 shares today
Share Market News

3 ASX mining stocks topping the most-traded list in October

Chinese stimulus news and company announcements likely contributed to the higher trading activity.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

3 ASX 200 stocks smashing the benchmark this week

These three ASX 200 stocks are leading the charge this week. Here’s how.

Read more »

Two people tired and resting after sports race.
Broker Notes

Fundie rates 2 ASX 200 stocks in short-term pain but with long-term gain potential

Blackwattle Investment Partners sees these 2 ASX 200 stocks as worthy of a buy and hold strategy.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why A2 Milk, EOS, GQG, and Mineral Resources shares are racing higher today

These shares are ending the week strongly. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »