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On Wednesday, Truist Securities adjusted its price target for Northrop Grumman (NYSE:NOC) shares, bringing it down to $550 from the previous target of $600, while retaining a Buy rating on the stock. The revision followed the company’s first-quarter financial results for 2025, which fell short of expectations due to an unexpected charge related to the B-21 development program. According to InvestingPro data, the stock is currently trading at an attractive P/E ratio of 18.3x, suggesting potential value despite recent challenges. Analyst targets now range from $464 to $620, with a consensus maintaining a moderate buy rating.
The company’s year-to-date gains were wiped out by the B-21 charge, with the stock declining 13.7% in the past week. Despite this setback, Truist Securities’ analyst cited several positive factors supporting the decision to maintain a Buy rating. Management reaffirmed its revenue and free cash flow (FCF) outlook but reduced its margin and earnings per share (EPS) expectations for the year. The long-term FCF targets remain intact, expected to absorb the B-21 cash headwind in future years. InvestingPro analysis shows the company maintains a strong financial health score, with a solid current ratio of 1.01 and manageable debt levels.
The analyst pointed out that the Sentinel program is making progress and that there is strong demand for missiles and weapons, which should drive double-digit growth in the defense systems segment. Additionally, the impact of tariffs is anticipated to be manageable, and the company’s backlog is projected to increase throughout 2025.
Despite the negative impact of the B-21 charge on the quarterly results, Northrop Grumman’s stock has shown resilience. Year-to-date, shares have only declined by 1%, outperforming the S&P 500 index, which has seen a decrease of 9.9%. This relative stability in the face of broader market downturns reflects investor confidence in the company’s long-term financial goals and its ability to manage current challenges.
In other recent news, Northrop Grumman Corporation reported its first-quarter 2025 earnings, showing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $3.32, notably lower than the expected $6.32, and revenue for the quarter was $9.5 billion, falling short of the forecasted $10.6 billion. This financial performance was impacted by a $477 million adjustment related to the B-21 program, which affected the segment operating margin. Despite these setbacks, Northrop Grumman reaffirmed its full-year 2025 sales guidance of $42-$42.5 billion, anticipating 3-4% organic growth. Bernstein maintained a Market Perform rating for Northrop Grumman, with a price target of $552, following the earnings release. The company also highlighted its strategic focus on innovation and market expansion, with CEO Kathy Warden emphasizing the importance of these elements in a rapidly evolving global environment. Additionally, Northrop Grumman continues to experience strong demand signals from global customers, resulting in a record backlog of $92.8 billion.
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