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Northrop Grumman Corporation (NOC) is a leading aerospace and defense technology company with a market cap of about $62.8 billion. Based in Falls Church, Virginia, it delivers innovative products and systems across a broad range of applications from undersea to outer space and into cyberspace.
Companies valued at $10 billion or more are generally labeled as “large-cap” stocks, and Northrop Grumman fits this criterion perfectly. With a vast presence across more than 550 facilities in every U.S. state and over 25 countries, the company is continually expanding its global footprint. Renowned for pioneering advanced technologies such as the B-21 Raider stealth bomber and the James Webb Space Telescope, Northrop Grumman remains at the forefront of aerospace and defense innovation.
However, despite its strong market position, the company is down 14.7% from its 52-week high of $496.89 reached in October last year. Over the past three months, the stock has underperformed, dropping nearly 8%, while the broader Nasdaq Composite ($NASX) gained 9.7% in the same period.
Longer term, NOC has plunged almost 9.4% on a YTD basis, lagging behind the NASX's 17.8% gains. Moreover, NOC’s shares have declined 5.3% over the past 52 weeks, compared to NASX's 29.8% gains over the same time frame.
To confirm the bearish price trend, NOC has been trading below both its 50-day and 200-day moving averages since late-May.
Northrop Grumman's relative underperformance can be attributed to lower-than-expected financial results, manufacturing challenges in key programs like the B-21 bomber and F-35 fighter jets, and the loss of a major $17 billion US missile contract to its industry rival Lockheed Martin Corporation (LMT).
However, the stock popped nearly 2.8% on Apr. 25 after its Q1 earnings results, which reported a 12% rise in profit bolstered by strong global defense spending, increased demand for rocket motors, and robust performance in its aeronautic and space systems segments.
To highlight the stock’s underperformance, its rival Lockheed Martin has outperformed NOC, gaining 1.3% over the past 52 weeks and 1.1% on a YTD basis.
Despite the stock’s underwhelming price action, analysts are cautiously optimistic with a consensus rating of "Moderate Buy" from 17 analysts. The mean price target of $501.72 suggests an 18.3% upside potential from current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
