TLDR
- Citi turned more positive on aerospace and defense stocks after a sharp pullback
- Commercial aerospace and aftermarket names seen recovering first
- Boeing price target raised to $260; Buy rating maintained
- Lockheed Martin, RTX, LOAR Holdings and Voyager Technologies given positive short-term views
- Citi does not expect an immediate V-shaped rally without a Middle East resolution
Citi has shifted to a more positive stance on parts of the aerospace and defense sector. Analyst John Godyn said in a report published Monday that recent declines have pushed several companies to compressed valuations, even as their operating performance stays strong.
The bank said commercial aerospace names, especially those tied to aftermarket services, look set to recover first. Many of these stocks are trading near three- to five-year valuation lows despite reporting solid first-quarter results.
Citi added positive short-term views on Lockheed Martin, RTX, LOAR Holdings, and Voyager Technologies. The bank said the recent selloff created selective buying opportunities tied to long-term defense and aerospace demand.
Lockheed Martin Corporation, LMT
Investor sentiment has turned overly pessimistic, according to Citi. Geopolitical tensions and concerns about U.S. politics have weighed on defense valuations, but Citi believes those pressures may ease later this quarter.
The bank pointed to continued strength in commercial aviation, missile systems, shipbuilding, and space technologies as key drivers likely to support earnings growth.
Boeing and Suppliers in Focus
Citi raised its price target on Boeing to $260 from $256 and kept its Buy rating. The bank cited improving aerospace demand, expected production increases for the 737 Max and 787, and stronger defense exposure tied to Middle East tensions.
LOAR Holdings received a positive 30-day short-term view. Citi pointed to strong commercial aerospace demand and favorable industry conditions as the reason.
Howmet Aerospace saw its price target raised to $303 from $271. The company beat earnings expectations and showed stronger margins and revenue growth.
Curtiss-Wright and Ducommun also received higher price targets. Citi highlighted accelerating commercial aerospace trends and improving defense demand for both companies.
Defense Stocks May Follow Later
Citi said defense stocks could recover after aerospace, as investors refocus on long-term spending tied to missiles, naval systems, and space programs.
Lockheed Martin got a positive short-term view, but Citi cut its price target to $571 from $675. The reduction reflects broader sector valuation compression. Citi said Lockheed remains exposed to rising U.S. and international defense budgets and the proposed “Golden Dome” missile defense initiative.
Northrop Grumman’s target was reduced to $628 from $742. Citi kept its Buy rating, pointing to the company’s exposure to nuclear modernization and missile defense programs.
Voyager Technologies drew attention as a higher-risk growth story. Citi raised its price target to $44 from $36 after the company reported stronger backlog momentum and expanded work in missile defense.
Citi said Voyager could benefit from demand for AI-enabled defense systems and commercial space infrastructure, including the Starlab space station project.
Citi was clear that it does not expect an immediate V-shaped rally without a resolution to the Middle East conflict.
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