Northrop Grumman's Flight Path Recalculated: Analyst Trims Forecast, Reiterates Buy

On Wednesday, Bank of America Securities analyst Ronald J. Epstein reiterated the Buy rating on Northrop Grumman Corporation NOC, lowering the price forecast from $585 to $550.

On Tuesday, the firm reported first-quarter revenue of $9.47 billion, missing analyst estimates of $9.94 billion, according to Benzinga Pro. The aerospace and defense company reported first-quarter adjusted earnings of $6.06 per share, missing analyst estimates of $6.26 per share.

The analyst notes that, in the coming years, Northrop Grumman is moving forward with the 21-aircraft low-rate initial production phase. The company will navigate the limitations on units 22 through 40, and the broader investment picture shouldn’t be overlooked, he added.

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The market might be too focused on short-term issues and missing the long-term strategic value of Northrop Grumman’s portfolio, which is strongly aligned with key defense priorities such as Sentinel, GPI, classified space programs, and electronic warfare.

The analyst writes that it is very likely that the FY26 President’s Budget Request will include funding for additional B-21 bombers.

Epstein revised the earnings per share estimates downward to account for the impact of B-21 program-related charges on the margins within the Aeronautics segment.

While this pressure on margins is expected to weigh on overall profitability, the negative effect may be partially cushioned by the company's ongoing share repurchase activity, the analyst writes.

As a result, the EPS forecast for 2025 has been reduced to $25.20 from the previous estimate of $28.20, reflecting the inclusion of a $477 million pre-tax charge.

The 2026 estimate has been revised to $28.10 from $28.80. The 2027 projection has been lowered to $29.50 from $30.80.

Price Action: Northrop Grumman shares are trading higher by 1.26% to $469.94 at last check Wednesday.

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