Northrop Grumman Downgraded To ‘Sector Perform’ – RBC Says 6% Sales Growth From 2026 Through 2028 Could Be Best-Case Scenario

RBC expects Northrop’s sales growth to remain broadly in line with its defense peers through 2028, according to TheFly.

• The analyst expects slower U.S. defense budget growth after fiscal 2027 to weigh on potential upside.
• According to investing.com, Northrop’s B-21, space portfolio and solid rocket motor business could provide additional revenue opportunities, though they may require incremental investment.
• The analyst action comes days after the U.S. Navy selected Boeing over Northrop Grumman for the F/A-XX program. 

Northrop Grumman Corp. (NOC) is in focus after RBC Capital downgraded the stock to 'Sector Perform' from 'Outperform' and cut its price target to $525 from $640, according to The Fly.

NOC shares traded nearly 1% lower at the time of writing on Friday.

According to TheFly, RBC sees 6% annual sales growth for Northrop from 2026 through 2028 as a best-case scenario, putting the company broadly in line with peers.

The analyst also pointed to Northrop's lower exposure to international sales. RBC said slower U.S. budget growth after fiscal 2027 could further limit the stock's potential upside.

Boeing Wins Navy's Next-Generation Fighter Contract

The RBC downgrade comes days after the U.S. Navy selected Boeing (BA) over Northrop Grumman for the F/A-XX program. The full-scale development phase of the sixth-generation fighter contract is valued at more than $20 billion and includes multiple test aircraft for ground, flight, systems, and weapons integration testing.

The Navy said the F/A-XX will begin augmenting and eventually replacing its F/A-18E/F Super Hornets and EA-18G Growlers in the 2030s. The aircraft is also expected to operate alongside the carrier-based F-35C and work with manned and unmanned platforms.

The award gives Boeing its second U.S. sixth-generation fighter program after the company was selected for the Air Force's F-47 in 2025. Technical and program details of the F/A-XX remain classified.

RBC Points To Other Potential Growth Drivers

According to Investing.com, RBC said potential upside revenue surprises could come from Northrop's B-21 program, space portfolio, and potentially its solid rocket motor portfolio. The analyst noted that pursuing those opportunities would require some level of incremental investment.

RBC is also more cautious about overall defense spending beyond fiscal 2027. According to Investing.com, its model assumes low-single-digit real growth from fiscal 2028 through 2031, with an increasing risk of budget crowding.

Retail View On NOC

On Stocktwits, retail sentiment around NOC remained ‘Neutral’, with ‘High’ message volumes over the past 24 hours.

NOC stock has declined more than 17% year-to-date.

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