RBC Downgrades Northrop Grumman to Sector Perform on Slower Defense Budget Growth

Northrop Grumman Corp. (NOC) shares declined nearly 1% on Friday after RBC Capital downgraded the stock to 'Sector Perform' from 'Outperform' and cut its price target to $525 from $640.

The downgrade comes days after the U.S. Navy selected Boeing over Northrop Grumman for the F/A-XX program, a multi-billion-dollar sixth-generation fighter contract that includes multiple test aircraft for ground, flight, systems, and weapons integration testing.

RBC analyst expects slower U.S. defense budget growth after fiscal 2027 to weigh on potential upside for Northrop Grumman's stock, citing low-single-digit real growth from fiscal 2028 through 2031 with an increasing risk of budget crowding.