Buy Rating for General Dynamics on G700 Certification and Robust Financial Outlook

In a report released yesterday, Sheila Kahyaoglu from Jefferies upgraded General Dynamics (GD – Research Report) to a Buy, with a price target of $335.00.

Sheila Kahyaoglu’s rating is based on the positive outlook for General Dynamics, considering several key growth indicators and financial metrics. She anticipates a top and bottom-line inflection point at Gulfstream, fueled by the certification of the G700 model and reduced research and development expenses, which is expected to significantly boost revenues and earnings. Additionally, there’s an upside to defense revenue guidance, which suggests potential earnings growth given the current estimate is conservative compared to Jefferies’ more optimistic projections. The anticipated free cash flow and the possibility of strategic portfolio adjustments, including a potential spin-off of the Technologies segment, further contribute to the Buy rating.
In the defense sector, General Dynamics is expected to experience stable program rates and margin expansion, which mitigates the risk of margin compression. This stability, coupled with a projected increase in defense margins, positions the company favorably against its peers. Furthermore, a strong free cash flow forecast, driven partly by a reduction in debt, suggests aggressive shareholder returns through buybacks. The company’s financial strategy and the anticipated growth in earnings per share, supported by the introduction of the G700, enhance the investment appeal of General Dynamics’ stock, warranting the Buy recommendation from Sheila Kahyaoglu.

In another report released on April 26, Wells Fargo also assigned a Buy rating to the stock with a $321.00 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.