Analyst Kristine Liwag of Morgan Stanley reiterated a Hold rating on General Dynamics (GD – Research Report), with a price target of $271.00.
Kristine Liwag’s rating is based on a nuanced analysis of General Dynamics’ recent performance and future outlook. The Hold rating reflects a balance between positive aspects such as the anticipated growth in Combat Systems due to international demand, and negative factors including ongoing supply chain issues affecting the Marine sector and the Department of Defense’s reduced request for Virginia-class submarines. Moreover, Liwag recognizes that General Dynamics’ conservative guidance for 2024 excludes potential benefits from share repurchases, which could suggest some undervalued potential in the stock. This tempered view, combined with the stock’s performance falling after Q1 2024 earnings report—reflecting margins lower than expected—supports the rationale for the Equal-weight rating and the maintained price target of $271.
The report also notes the challenges faced with the delayed Federal Aviation Administration (FAA) certification of the G700, which has impacted the Aerospace division’s margins. Nonetheless, General Dynamics has maintained its delivery target for the G700, indicating a potential recovery in the latter half of the year. The expectation of improved margins in the second half of 2024 is promising, but the current pressures on the Marine division and the associated risks lead to a cautious outlook. Liwag’s Hold rating, therefore, encapsulates the current mixed financial results, the conservative management guidance, and the potential for upside balanced against the operational challenges that General Dynamics is working to navigate.
According to TipRanks, Liwag is a 4-star analyst with an average return of 5.9% and a 58.43% success rate. Liwag covers the Industrials sector, focusing on stocks such as Boeing, Hexcel, and Embraer SA.
In another report released on April 18, Bernstein also maintained a Hold rating on the stock with a $290.00 price target.
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General Dynamics (GD) Company Description:
Virginia-based General Dynamics Corp. is an aerospace and defense company. The company provides the world’s most technologically advanced business jets, wheeled combat vehicles, command and control systems and nuclear submarines. It operates through five business groups: Aerospace, Combat Systems, Information Technology, Mission Systems and Marine Systems.
