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On Friday, Goldman Sachs analyst Noah Poponak upgraded Huntington Ingalls (NYSE:HII) Industries' stock rating from Sell to Buy, significantly raising the price target to $234 from the previous $145. The upgrade followed a recent executive order issued on April 9, 2025, which sets the stage for increased investment in the U.S. shipbuilding industry. According to InvestingPro analysis, the stock appears fairly valued, trading at 14.5x earnings with a market cap of $8.2 billion.
Poponak noted that while the executive order does not currently provide contractual relief for companies like Huntington Ingalls, such relief could be a feature of future policy initiatives. Furthermore, the analyst pointed out that Navy shipbuilding is expected to be a focal point in an anticipated higher defense budget. The market has already begun pricing in this potential, with the stock showing strong momentum - up 8.6% in the past week and 7.1% year-to-date.
Despite Huntington Ingalls having lowered its margin assumptions in the last two quarters, Poponak suggested that this adjustment might have been sufficient to reset expectations for the medium term. He also remarked on the company's stock trading at a discount compared to other large-cap defense primes across most key metrics. InvestingPro data reveals the company's strong dividend track record, having raised dividends for 13 consecutive years, with a current yield of 2.7%. Get access to more exclusive insights and 12+ additional ProTips for HII through InvestingPro's comprehensive research platform.
The executive order is seen as a positive development for the shipbuilding sector, and for Huntington Ingalls specifically, as it may benefit from the administration's focus on bolstering the U.S. shipbuilding base. With revenue of $11.5 billion in the last twelve months and an overall Financial Health score of "FAIR" from InvestingPro, the company appears well-positioned to capitalize on these opportunities.
The new price target of $234 represents a substantial increase and reflects Goldman Sachs' confidence in Huntington Ingalls' potential for growth amidst the changing landscape of defense spending and shipbuilding investment in the United States.
In other recent news, Huntington Ingalls Industries (HII) has entered a memorandum of understanding with HD Hyundai Heavy Industries (KS:009540) to enhance ship production, aiming to bolster both defense and commercial shipbuilding. This collaboration is expected to improve production efficiency and strengthen the maritime industrial base in the United States and South Korea. Additionally, HII has sold over 700 REMUS uncrewed underwater vehicles globally, reinforcing its leadership in advanced maritime technology. These vehicles are widely used in naval operations such as intelligence and surveillance. In another development, HII has been selected to develop a High-Energy Laser weapon system prototype for the U.S. Army, targeting enemy unmanned aircraft systems. This system will be adaptable for both fixed-site defense and vehicle integration. Meanwhile, Cantor Fitzgerald released a report highlighting a positive outlook for the government technology and space sector, noting potential long-term investment opportunities despite anticipated volatility. Lastly, HII shares rose following news of a potential executive order from President Donald Trump aimed at revitalizing the U.S. shipbuilding industry, which could increase demand for U.S.-built ships.
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