General Dynamics stock target raised to $295 by Argus

On Tuesday, Argus analysts increased the price target for General Dynamics Corp. (NYSE:GD) to $295 from $280, maintaining a Buy rating on the shares. The firm cited the aerospace and defense industry's importance to the U.S. economy as a key factor in its assessment of the company's prospects. This optimistic outlook aligns with broader analyst sentiment, as InvestingPro data shows 15 analysts have recently revised their earnings estimates upward for the upcoming period. According to InvestingPro's Fair Value analysis, the stock currently appears undervalued, suggesting potential upside for investors. General Dynamics has faced supply chain issues since the pandemic, with component delays from suppliers affecting productivity and margins. However, management's focus on production efficiencies and planning for longer delivery times is expected to improve costs and margins.

The analysts anticipate that recent order trends, high demand for the company's commercial aircraft, and a strong backlog driven by global geopolitical tensions will benefit General Dynamics' revenue and earnings. The Federal Aviation Administration's (FAA) certification of the G800 is also expected to boost demand and margins in the latter half of 2025. As supply chain challenges are mitigated, management predicts margin expansion could reach 600 to 700 basis points, leading to significant improvements in 2025 with earnings potentially growing faster than revenue.

Despite concerns over potential tariffs impacting the aerospace segment due to its significant export volume, General Dynamics' management has not specified financial impacts. Nonetheless, they have demonstrated confidence by increasing dividends by 6% and repurchasing $0.6 billion worth of stock this quarter. The company's commitment to shareholder returns is evidenced by its impressive 47-year streak of maintaining dividend payments and 11 consecutive years of dividend increases. InvestingPro research reports provide comprehensive analysis of such key metrics and long-term performance indicators across 1,400+ top stocks. The shares are currently trading at 18 times Argus' 2025 earnings per share (EPS) estimate, which is within the five-year average range of 14 to 19 times.

Argus analysts believe that General Dynamics' stock is trading at a discount compared to its peers when considering price-to-earnings (P/E) and price-to-sales ratios. The firm's revised target price reflects expectations for heightened demand and supply chain improvements in the near future.

In other recent news, General Dynamics Corporation reported impressive financial results for the first quarter of 2025, with earnings per share (EPS) of $3.66, surpassing the forecast of $3.45. The company's revenue reached $12.2 billion, exceeding expectations of $11.86 billion, marking a 13.9% year-over-year increase. Notably, the Aerospace segment experienced a significant 45.2% revenue growth, driven by the certification of the Gulfstream G800 and a 50% rise in aircraft deliveries. Additionally, General Dynamics secured contract modifications worth $12.4 billion for the construction of two Virginia-class submarines, with potential options to increase the total value to $17.2 billion. Despite these strong performances, RBC Capital Markets maintained their Sector Perform rating on General Dynamics, citing concerns over potential risks from tariffs and defense budget allocations. Analysts at RBC anticipate that the company might revise its 2025 guidance upwards in the second-quarter results. General Dynamics' robust backlog and contract pipeline continue to provide a strong competitive position, with a total estimated contract value of $141 billion.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.