Key Stats for NOC Stock
- Past-6-Month Performance: 22%
- 52-Week Range: $449 to $746
- Valuation Model Target Price: $761
- Implied Upside: 5%
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What Happened?
Northrop Grumman has risen about 22% over the past 6 months, recently trading near $724 per share and holding close to its 52-week high of $746 as investors rotated into defense names benefiting from sustained global security demand.
The rally reflects improving confidence in long-cycle program visibility, expanding missile defense opportunities, and steady capital deployment aligned with rising defense budgets.
The stock gained momentum after CEO Kathy Warden said at Citi’s Global Industrial Tech & Mobility Conference that the company is operating in an “unprecedented demand cycle” and reaffirmed 2026 guidance for mid-single-digit revenue growth, low to mid-11% segment operating margins, and $3.1 billion to $3.5 billion in free cash flow.
Warden also noted the B-21 is “performing even better than we modeled,” with a framework agreement in progress to accelerate production supported by $2 billion to $3 billion of incremental investment, while Sentinel restructuring remains on track with initial operating capability targeted for the early 2030s.
Analyst commentary has reinforced the advance. Citigroup reiterated its Buy rating and $781 price target, highlighting stronger production visibility and durable long-term demand across strategic programs.
Missile defense is approaching 10% of revenue and Space returned to growth with 5% expansion in the fourth quarter of 2025, adding further support to the investment case as investors look toward 2026 execution milestones.
Institutional activity has been active alongside the rally. Vanguard increased its stake by 0.8% to 13,531,586 shares, representing about 9.48% of the company and valued at $8.245 billion, while NEOS Investment Management raised its position by 50.9% to 13,581 shares worth $8.275 million and Stratos Wealth Partners boosted holdings by 25.5% to 8,308 shares.
Although some firms trimmed exposure, overall institutional ownership remains high at roughly 83.4%, underscoring continued large-cap investor confidence.
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Is NOC Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 5.3%
- Operating Margins: 10.9%
- Exit P/E Multiple: 22x
Revenue growth is expected to remain in the mid-single-digit range as the B-21 transitions further into scaled production, Sentinel progresses through restructuring milestones, and missile defense and Space programs expand.
These areas carry multi-year funding visibility and are strategically prioritized within U.S. and allied defense budgets, supporting durable backlog conversion rather than cyclical swings.
Margin performance depends heavily on program mix and execution quality. As higher-value aerospace and mission systems work ramps and fixed-price production programs scale, operating leverage improves, particularly if accelerated build rates materialize.
Continued capital investment tied to production expansion could also enhance long-term returns if volume increases as planned.
Based on these inputs, the model estimates a target price of $761, implying about 5% total upside over roughly 2.8 years.
At current levels near $724, shares appear slightly overvalued, with performance in 2026 likely dependent on faster-than-expected B-21 production acceleration, successful Sentinel restructuring execution, missile defense scaling, and sustained global defense funding to justify further upside.
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