Bernstein raises Huntington Ingalls price target to $257

Published 06/05/2025, 16:44
Bernstein raises Huntington Ingalls price target to $257

On Tuesday, Bernstein SocGen Group adjusted its price target on shares of Huntington Ingalls (NYSE:HII), the largest military shipbuilding company in the United States. The new target is set at $257, up from the previous $232, while the firm maintains a Market Perform rating on the stock. According to InvestingPro data, the stock currently trades at a P/E ratio of 16.8x, with analyst targets ranging from $166 to $316.

Huntington Ingalls Industries reported first-quarter earnings that surpassed expectations, with earnings per share (EPS) of $3.79, notably higher than the consensus forecast of $2.84 and Bernstein’s estimate of $2.94. However, the company’s revenues for the quarter came in slightly under the anticipated $2.80 billion, at $2.73 billion. The analyst pointed out that the revenue figure is of lesser significance due to the long-term nature of shipbuilding contracts. The company has shown strong momentum, with InvestingPro data showing a remarkable 24.4% YTD price return.

The company experienced mixed results in its margins across different divisions. The Newport News and Mission Systems segments saw margins exceed Bernstein’s estimates, whereas the Ingalls segment fell short. The lower margins at Ingalls were attributed to underperformance on amphibious ship projects, which continue to face supplier-related challenges.

Despite these mixed results, Bernstein remains optimistic about Huntington Ingalls’ future margin outlook, especially for the Newport News division. This optimism is partly due to the recent Virginia-class submarine (VCS) award and increased budgetary support. Consequently, the firm has raised its enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple for Huntington Ingalls from 9.8 times to 10.6 times, which contributed to the higher price target.

The analyst’s remarks underscore the company’s strong EPS beat and the potential for improved margins, which have informed Bernstein’s decision to adjust the price target upwards while reiterating a Market Perform rating on Huntington Ingalls stock. InvestingPro analysis reveals the company has maintained dividend payments for 14 consecutive years, with a current yield of 2.3%. InvestingPro subscribers can access 8 additional key insights about HII, including detailed margin analysis and growth metrics in the comprehensive Pro Research Report.

In other recent news, Huntington Ingalls Industries Inc (HII) reported strong earnings for Q1 2025, with earnings per share (EPS) of $3.79, surpassing analysts’ forecast of $2.84 by 33.8%. Despite this earnings beat, the company’s revenue decreased by 2.5% year-over-year, missing forecasts by $100 million, which may have contributed to investor concerns. The company’s operating margin improved to 5.9% from 5.5% last year, showcasing effective cost management. HII’s backlog stands at $48 billion, with $28 billion funded, and the company reaffirmed its 2025 guidance, anticipating top-line growth of 15% by February 2030.

Additionally, HII announced a strategic memorandum of understanding (MOU) with HD Hyundai Heavy Industries (KS:009540) to explore collaborative opportunities in ship production. This partnership aims to enhance both defense and commercial shipbuilding projects. On the analyst front, firms like Bernstein and Barclays (LON:BARC) have shown interest in the company’s operational strategies and contract structures, particularly regarding shipbuilding contracts. Furthermore, HII’s Mission Technologies division secured a contract to develop a high-energy laser counter-drone system for the US Army, emphasizing the company’s focus on innovation and defense priorities. These developments highlight HII’s ongoing efforts to strengthen its competitive position through strategic initiatives and international partnerships.

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