Morgan Stanley's Top Picks In Aerospace For 2022

Morgan Stanley analyst Kristine Liwag says Aerospace stocks are not pricing in recovery as sentiment is negative, and stocks are trading at about a 27% discount to normalized 2019 levels.
The analyst named TransDigm Group Inc TDG, her top pick in Aerospace in North America for 2022. She has an Overweight rating and a price target of $762 (an upside of 20.12%) on the company.
Liwag views TransDigm as a pureplay on the aftermarket and sees the potential for upside to her and consensus estimates depending on the pace of an air traffic recovery.
In terms of Defense, Liwag named Northrop Grumman Corp NOC as her "preferred Defense prime," calling it her "preferred way to play the Great Power Competition theme in 2022."
She is particularly bullish on the company's space portfolio and sees an additional runway for growth there. Liwag has an Overweight rating and a $440 (an upside of 14%) price target on Northrop shares.
Liwag also argues that Northrop today is similar to Lockheed Martin Corp LMT a decade ago with the F-35 given its position as the prime contractor for the B-21 bomber and Ground-Based Strategic Deterrent put it "on the cusp of major platform-fueled growth."
She has an Overweight rating and a price target of $430 (an upside of 22%) on Lockheed Martin shares.
Price Action: TDG shares traded higher by 0.10% at $635.06, NOC higher by 0.11% at $384.94, and LMT lower by 0.27% at $352.62 on the last check Friday.

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