Wolfe Research downgraded Northrop Grumman to Underperform from Peer Perform with a $450 price target. The analyst has concerns that the stock’s valuation “may be unsustainably high in both absolute and relative terms.” Downside risk to the nearer term budget trajectory adds to the firm’s concern. Wolfe sees more downside risk on defense budget outcomes broadly and execution risk more specifically, which it says could promote some de-rating of Northrop’s multiple.
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