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MarketScreener Homepage  >  Equities  >  Nyse  >  Northrop Grumman Corporation    NOC

NORTHROP GRUMMAN CORPORATION

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Defense Stocks Are a Rare Bright Spot in Friday's Session

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01/03/2020 | 12:19pm EST

By Michael Wursthorn

Aerospace and defense stocks rose in the wake of the U.S.'s killing of an Iranian general as some investors wagered tensions between the two countries will ratchet higher.

But some analysts urged investors to look past the latest flare-up in geopolitical tensions and pounce on the broader stock market's pullback.

Shares of global security company Northrop Grumman Corp. led the defense rally, jumping 4.4% to be on pace for their biggest single day gain since late July. Lockheed Martin Corp., L3Harris Technologies Inc. and Raytheon Co. all rose more than 1%.

That helped push the $5.6 billion iShares U.S. Aerospace and Defense ETF up 1% in recent trading.

The defense rally represented a rare bright spot in the stock market Friday. Investors mostly retreated from stocks following the overnight strike, selling everything from airliners to banks to technology companies, while buying gold, oil and U.S. Treasury bonds. The S&P 500 was recently down about 0.5%, unraveling its gain for the week.

Some Wall Street analysts warned investors to avoid making knee-jerk decisions following the strike. Mark Haefele, global chief investment officer at UBS's wealth-management arm, said individual geopolitical risks such as this tend not to be enough to be a long-term driver of stock prices.

"Geopolitical events by their nature are unpredictable, but previous periods of increased tensions suggest that the impact on wider markets tends to be short-lived, with more lasting effects confined to local markets and assets that are directly impacted by the tensions," Mr. Haefele said.

Corporate profits and changes within the U.S. economy should remain the driving focus of investment decisions, even for aerospace stocks, which tend to see a boost following a geopolitical flare-up, analysts said.

If anything, investors should consider pouncing on some of the stocks investors were selling on Friday, such as shares of tech companies, said Dan Ives, a managing director of equity research at Wedbush Securities.

Mr. Ives recommended using shock events to buy favored tech stocks and other risky assets, such as shares of Apple Inc. Shares of the iPhone maker have more than doubled over the past year but were off 0.7% Friday.

"We remain firmly bullish on tech stocks and the growth prospects of the coming year and believe any temporary risk-off trade is a golden buying opportunity rather than a time to retreat with the bears yelling fire in a crowded theater," Mr. Ives added.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. 0.02% 324.95 Delayed Quote.10.63%
DJ INDUSTRIAL -0.09% 29398.08 Delayed Quote.3.01%
L3HARRIS TECHNOLOGIES, INC. 0.68% 228.55 Delayed Quote.14.73%
LOCKHEED MARTIN CORPORATION 0.72% 437.85 Delayed Quote.11.64%
LONDON BRENT OIL 1.56% 57.34 Delayed Quote.-14.45%
NASDAQ 100 0.29% 9623.580482 Delayed Quote.9.88%
NASDAQ COMP. 0.20% 9731.17573 Delayed Quote.8.40%
NORTHROP GRUMMAN CORPORATION 0.80% 370.94 Delayed Quote.7.84%
RAYTHEON 0.19% 227.18 Delayed Quote.3.19%
S&P 500 0.18% 3380.16 Delayed Quote.4.62%
WTI 1.48% 52.17 Delayed Quote.-16.22%
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Financials (USD)
Sales 2020 35 701 M
EBIT 2020 3 928 M
Net income 2020 3 879 M
Debt 2020 9 678 M
Yield 2020 1,52%
P/E ratio 2020 16,0x
P/E ratio 2021 14,2x
EV / Sales2020 2,01x
EV / Sales2021 1,89x
Capitalization 62 183 M
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Technical analysis trends NORTHROP GRUMMAN CORPORATI
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 411,10  $
Last Close Price 370,94  $
Spread / Highest target 22,7%
Spread / Average Target 10,8%
Spread / Lowest Target -11,8%
EPS Revisions
Managers
NameTitle
Kathy J. Warden Chairman, President & Chief Executive Officer
Kenneth L. Bedingfield Chief Financial Officer & Corporate Vice President
Donald E. Felsinger Lead Independent Director
Thomas M. Schoewe Independent Director
Karl J. Krapek Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
NORTHROP GRUMMAN CORPORATION7.84%62 183
UNITED TECHNOLOGIES CORPORATION2.47%131 433
LOCKHEED MARTIN CORPORATION11.64%123 446
RAYTHEON3.19%63 256
GENERAL DYNAMICS CORPORATION6.64%54 344
L3HARRIS TECHNOLOGIES, INC.14.73%50 524