Raytheon awarded $71 million in Navy contracts for missile systems
On Wednesday, RBC Capital Markets adjusted its outlook for Northrop Grumman Corporation (NYSE:NOC) by reducing the price target to $550 from the previous $575, while sustaining an Outperform rating on the company’s shares. The stock, currently trading at $474.37, has seen a sharp 13.66% decline over the past week. According to InvestingPro data, analyst targets range from $463.83 to $620, suggesting potential upside despite recent challenges. The revision comes in the wake of Northrop Grumman’s first-quarter earnings for 2025, which did not meet expectations due to a significant charge related to its B-21 bomber program.
Northrop Grumman’s adjusted earnings per share (EPS) for the quarter was reported at $3.32, which includes a substantial $2.74 EPS impact from a $477 million charge associated with the B-21 program. This charge is primarily due to one-time manufacturing process changes and higher procurement costs. Consequently, the company’s total revenue for the quarter declined by 7%, and segment margins stood at 6%.
In response to these developments, Northrop Grumman has revised its financial guidance for the year 2025. The company has lowered its forecasts for both EPS and operating income. Despite this setback, it has decided to maintain its guidance for revenue and free cash flow (FCF).
The B-21 charge has notably dampened investor sentiment, particularly as it challenges the previously held belief that the B-21 program risks had been mitigated. Nevertheless, RBC Capital’s analyst believes that Northrop Grumman remains in a strong position, especially given its strategic defense placement and potential budget upside. The firm’s continued Outperform rating reflects this positive outlook, despite the lowered price target. The company’s strong market position is further evidenced by its 21-year streak of dividend increases and impressive 28.34 USD trailing twelve-month earnings per share. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading below its intrinsic value, presenting a potential opportunity for value investors.
In other recent news, Northrop Grumman Corporation reported its first-quarter 2025 earnings, revealing a notable shortfall in both earnings per share (EPS) and revenue projections. The company posted an EPS of $3.32, significantly below the consensus estimate of $6.28, primarily due to a $477 million adjustment related to the B-21 bomber program. Revenue for the quarter was $9.5 billion, falling short of the expected $10.6 billion. Despite these challenges, Northrop Grumman reaffirmed its full-year sales guidance of $42-$42.5 billion, projecting 3-4% organic growth.
Analyst firms have reacted to these developments with varied assessments. Truist Securities adjusted its price target for the company to $550 from $600 but maintained a Buy rating, highlighting strong demand for missiles and weapons as potential growth drivers. Meanwhile, Bernstein SocGen Group maintained a Market Perform rating with a $552 price target, acknowledging the earnings miss but noting the company’s strategic focus on the B-21 program. The company anticipates a sales ramp in the second half of the year, driven by new program awards and subcontractor deliveries.
Northrop Grumman’s management expressed confidence in overcoming current setbacks, emphasizing progress in key programs like the Sentinel missile system and maintaining revenue and free cash flow guidance. Despite the earnings miss, the company continues to see strong demand from global customers, contributing to a record backlog of $92.8 billion. These developments underscore the company’s strategic positioning in the defense sector, with an emphasis on innovation and market expansion.
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