Northrop Grumman Stock Rises. Why Shares Can Hit $700.
Oct 08, 2025 10:26:00 -0400 by Al Root | #Aerospace and Defense #Street Notes
Northrop Grumman stock has risen 35% so far this year. (MEHMET ESER/Middle East Images/AFP via Getty Images)
Key Points
- Northrop Grumman shares rose after a Deutsche Bank upgrade to Buy, with a new top target price of $700 from $575.
- Analyst Scott Deuschle cited higher defense spending, including a proposed $1 trillion US budget for 2026, as a tailwind.
- Improving cash flow from the B-21 bomber and upcoming Sentinel missile production are priorities for Northrop Grumman.
Shares of defense contractor Northrop Grumman rose Wednesday after catching an upgrade that came with a new top target price on Wall Street.
On Wednesday, Deutsche Bank analyst Scott Deuschle upgraded shares of Northrop Grumman to Buy from Hold, and took his price up to $700 from $575 a share.
Northrop stock added 2.6%, closing at $637.95, while the S&P 500 gained 0.6% and the Dow Jones Industrial Average finished flat.
“We remain bullish on the sector,” wrote Deuschle. He sees higher military spending providing a tailwind for shares. President Donald Trump has proposed a $1 trillion budget for fiscal year 2026, up about 13% year over year. Defense spending in Europe is set to accelerate as well.
For Northrop, improving cash flow is a priority as the B-21 stealth bomber becomes cash profitable and the Sentinel missile system nears production.
The $700 mark is the top analyst target for the stock, according to FactSet. The average analyst price target for Northrop shares is about $626.
Overall, 52% of analysts covering Northrop stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Coming into Wednesday trading, Northrop stock was up about 32% year to date. Shares were trading for about 22 times estimated 2026 earnings, up from an average of closer to 18 times over the past few years.
Deuschle’s price target values Northrop stock at about 24 times consensus 2026 estimated earnings.
Write to Al Root at allen.root@dowjones.com