BofA remains bullish on Northrop, citing major defense programs and potential protest prospects.

  • BofA called Northrop Grumman’s loss of the Navy fighter contract to Boeing disappointing but maintained its Buy rating. 
  • BofA sees potential near-term stock weakness as an attractive entry opportunity. 
  • Boeing’s $20 billion-plus Navy deal strengthens its military business after winning the F-47 program. 

Northrop Grumman Corp. (NOC) stock is heading for a second straight weekly decline after losing the U.S. Navy’s F/A-XX fighter contract to Boeing Co. (BA), but Bank of America remains constructive, calling any near-term weakness potentially attractive as Northrop retains major defense programs. 

Northrop Grumman stock inched 0.3% higher in Thursday’s premarket. The stock is down 5.3% so far this week and 10% in September, marking its worst month since April.

BofA Calls Navy Fighter Loss Disappointing For Northrop 

BofA called Boeing winning a major U.S. Navy fighter jet contract over Northrop Grumman as “disappointing”. However, the firm said Northrop still has several major defense programs that could support its business. 

BofA highlighted Northrop’s involvement in the B-21 Raider bomber, Sentinel intercontinental ballistic missile program and several other defense initiatives. Those projects give the company a substantial pipeline of work even without the latest Navy fighter award.

The firm also said it would not be surprised if Northrop challenges the Navy’s decision. A formal protest could create another development for investors to monitor following the contract announcement. BofA indicated that a near-term decline in the stock could create an opportunity to enter the position, while reiterating its ‘Buy’ recommendation.

Boeing Builds Momentum In Military Aviation 

The F/A-XX will eventually replace older F/A-18 fighter aircraft and operate alongside the F-35C on Navy aircraft carriers. The Navy expects the new jets to begin entering service in the 2030s.

NOC Stock: Retail View 

On Stocktwits, retail sentiment around the stock remained in ‘bearish’ territory. 

A user said, “I don't think the government's selection was the best option for the American defense industry.  My guess is Boeing had better lobbyists.”

Another user said, “NGAD award literally doesn't matter. NOC reported a backlog of 40-60bil last annual shareholders meeting.”

NOC stock has declined 15% year-to-date. 

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