/Northrop%20Grumman%20Corp_%20logo%20on%20phone-by%20Piotr%20Swat%20via%20Shutterstock.jpg)
Valued at around $75 billion by market cap, Northrop Grumman Corporation (NOC) operates in the aerospace and defense industry. The Falls Church, Virginia-based company specializes in providing advanced technology solutions across multiple domains, including autonomous systems, cyber, C4ISR, strike, logistics, and space systems, serving customers globally.
Shares of the defense contractor have lagged behind the broader market over the past 52 weeks. NOC has gained 17.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 28.3%. In 2024, shares of NOC are up 7.9%, compared to SPX's 17.6% gain on a YTD basis.
Zooming in further, NOC is also underperforming the S&P Aerospace & Defense SPDR's (XAR) 27.4% gain over the past 52 weeks and a 12.3% increase on a YTD basis.
Northrop Grumman has underperformed largely due to cost overruns and delays in its Ground Based Strategic Deterrent (GBSD) and B-21 Raider programs, raising investor concerns. However, the stock surged in July, driven by better-than-expected Q2 results revealed on Jul.25, including a 7% increase in sales and 13% growth in operating income, which exceeded Wall Street estimates. Additionally, the company's raised full-year earnings and revenue guidance, coupled with assurances about the B-21 bomber's profitability, further boosted investor confidence.
For the current fiscal year, ending in December, analysts expect NOC's EPS to grow almost 8% year over year to $25.15. The company's earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, nine “Holds,” and two “Strong Sells.”
This configuration is slightly more bullish than three months ago, with six analysts suggesting a “Strong Buy.”
On Aug. 9, Morgan Stanley raised Northrop Grumman's price target to $592 and maintained an “Overweight” rating, citing strong Q2 performance and the company's potential defensiveness amid heightened geopolitical tensions.
The mean price target of $519.28 represents a premium of just 2.9% to NOC's current levels. The street-high price target of $605 implies a modest potential upside of 19.8% from the current price levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
