Northrop Grumman (NOC) Stock Forecast & Price Target

Northrop Grumman demonstrated robust financial performance in 3Q25, reporting a 32% year-over-year increase in international sales, contributing to a 20% year-to-date growth, which is propelled by strong contract awards and a book-to-bill ratio of 1.45. Additionally, the company's 2Q25 results highlighted total sales of $10.4 billion, reflecting a 1% increase year-over-year and exceeding estimates by 3.3%, with the Aeronautics Systems segment experiencing a notable revenue rise fueled by increased production of the B-21 bomber. The significant growth in the Defense Systems segment, which displayed an impressive 55% increase in international sales year-over-year, underscores the diversified contractor's strategic advantage and positions it favorably for continued expansion.

Northrop Grumman's free cash flow (FCF) declined by 42% year-over-year to $637 million, significantly underperforming against the market's expectation of $1.13 billion. The company faces challenges ahead, particularly regarding potential defense budget cuts and program cancellations, which could impact future growth and operational stability, especially concerning the B-21 and Sentinel GBSD programs. Additionally, the international bookings-to-bill ratio remains below 1.0x year-to-date, indicating difficulties in securing new orders, which further exacerbates the negative outlook for the company's performance moving forward.