Analyst revises defense stock outlook as Trump presidency begins

Core Viewpoint - The second presidency of Donald Trump has significantly impacted financial markets, with defense stocks underperforming due to uncertainty about future policies, while some sectors like cryptocurrency have thrived due to presidential support [1][2]. Defense Sector Performance - Defense stocks have generally lagged behind the broader market since Trump's reelection, primarily due to uncertainty regarding his second term [2]. - The Department of Government Efficiency (DOGE), led by Elon Musk, has targeted longstanding defense programs, which adds to the uncertainty in the sector [2]. Investment Bank Insights - Citigroup has adopted a bullish stance on defense stocks, highlighting four companies that could benefit from potential policy changes under the new administration [4]. Company Summaries - V2X Inc. (NYSE: VVX): - Citigroup initiated coverage with a 'Buy' rating and a price target of $64, citing potential outsourcing opportunities due to government headcount reductions [5][6]. - The stock was trading at $52.89, reflecting a 10.58% increase year-to-date, with a projected 21% upside [6]. - Curtiss-Wright Corp (NYSE: CW): - Coverage initiated with a 'Buy' rating and a price target of $410, with expectations of becoming net cash positive by 2026 and 13% earnings growth through 2027 [7][8]. - The stock was trading at $375.53, having increased by 5.82% year-to-date, indicating a 9.17% upside potential [9]. - RTX Corporation (NYSE: RTX): - Upgraded from 'Neutral' to 'Buy' with a price target raised to $153 from $132, supported by demand from Europe and positive commercial aftermarket commentary expected [10][11]. - The stock was priced at $122.57, showing a 5.92% increase year-to-date, with a 24.82% upside forecast [12]. - Northrop Grumman (NYSE: NOC): - Upgraded to 'Buy' from 'Neutral', with a price target maintained at $587, as the stock is viewed as fairly valued after a recent selloff [13][14]. - The stock was trading at $488.10, reflecting a 4.01% increase year-to-date, with a 20.26% upside potential [15].