Key insights
- Jefferies lowered its price target for Northrop Grumman (NOC) to $620 while maintaining a Buy rating, citing below-average organic growth and increased capital expenditures. The company's B-21 agreement expands production, potentially adding $500 million to 2027 sales. Space Force procurement is expected to increase significantly. NOC's consistent dividend increases and attractive valuation suggest potential upside, but the reduced price target reflects concerns about growth relative to spending.
Investing.com - Jefferies lowered its price target on Northrop Grumman stock (NYSE:NOC) to $620 from $660 while maintaining a Buy rating on the shares. The stock currently trades at $555.58, with a P/E ratio of 17.43 and a PEG ratio of 0.67, suggesting attractive valuation relative to growth prospects.
The firm met with Chair, CEO and President Kathy Warden and CFO John Greene at Northrop Grumman’s headquarters. The company’s USAF B-21 agreement expands production by 25%, adding potential $500 million to 2027 sales.
Northrop Grumman’s weapons exposure stands at approximately 10% compared to an average of 15% for Lockheed Martin and RTX. The company expects international sales to rise 20% in 2025 with awards in 2026 converting to 2027 sales.
Space Force procurement is expected at $19 billion in fiscal year 2027 compared to $4 billion in fiscal year 2026. The company’s capital expenditures are increasing at a 14% compound annual growth rate to approximately 4.5% of sales versus a three-year average of 4%.
Jefferies based its $620 price target on a 4.0% free cash flow yield on 2027 free cash flow of $3.6 billion. The firm cited below-average organic growth and capital expenditure levels as factors in the valuation. According to InvestingPro analysis, the stock appears undervalued at current levels. The company has raised its dividend for 22 consecutive years, providing consistent income alongside growth potential. For deeper insights into NOC’s valuation and comprehensive analysis, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Northrop Grumman Corporation has introduced augmented and virtual reality tools to enhance the training and maintenance of the E-2D Advanced Hawkeye aircraft. This development aims to reduce training and labor time significantly. Additionally, Northrop Grumman declared a quarterly dividend of $2.47 per share, payable to shareholders on June 17, 2026. In the analyst sphere, Bernstein SocGen Group lowered its price target for Northrop Grumman to $660 from $765, maintaining a Market Perform rating. Furthermore, Northrop Grumman has secured a contract as part of the Department of War’s Drone Dominance Program, becoming one of five preferred payload providers. This program is a $1 billion initiative to deploy low-cost unmanned aerial systems. The company also launched the LR-450, a compact navigation system for spacecraft, which provides tracking and orientation capabilities without the need for satellite signals. These developments highlight Northrop Grumman’s ongoing efforts in technological advancements and strategic projects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.