Northrop Grumman (NOC) Stock Forecast & Price Target

Northrop Grumman's strong financial performance in 2Q25 is underscored by total sales of $10.4 billion, reflecting a 1% year-over-year increase and a sequential rise of 9% from the previous quarter. The company experienced notable international sales growth, with a 32% year-over-year increase in 3Q25, contributing to a 20% year-to-date rise largely driven by robust contract awards and a strong book-to-bill ratio. Additionally, the Aeronautics Systems segment showed solid performance with revenues of $3.11 billion, attributed to increased production of the B-21 bomber and other key programs, indicating a positive trajectory for the company's diverse defense portfolio.

Northrop Grumman reported a significant decline in free cash flow (FCF), which fell to $637 million, reflecting a 42% year-over-year decrease and falling short of market expectations that anticipated $1.13 billion. The aerospace and defense contractor's sales growth was primarily driven by the Mission Systems segment, which increased by 14%, while the Space Systems segment experienced a 12% decline in sales, raising concerns about future growth. Furthermore, uncertainties surrounding defense budget cuts, potential cancellations of critical programs like the B-21, and competitive pressures from new entrants have contributed to an overall negative sentiment regarding the company's future performance and guidance for 2025.