Northrop Grumman downgraded to Hold from Buy at Deutsche Bank

Deutsche Bank analyst Scott Deuschle downgraded Northrop Grumman to Hold from Buy with a price target of $473, down from $541. The firm says its previous investment thesis is “increasingly untenable” in the face of incremental cost challenges on the Sentinel program. The challenges on both of Northrop’s principal growth pillars Sentinel and B-21b are making it clear that the industry-leading sales growth Deutsche’s investment thesis was predicated on “may be substantially driven by profitless growth,” the analyst tells investors in a research note. The firm says the uncertainty on both programs is likely to exert a persistent overhang on the shares, capping any future multiple expansion opportunity.