On Monday, Deutsche Bank (ETR:DBKGn) adjusted its price target for General Dynamics Corp. (NYSE: NYSE:GD), a major aerospace and defense company with a market capitalization of $78 billion, to $303 from the previous target of $306. The firm has decided to maintain a Hold rating on the stock. According to InvestingPro data, the company currently trades at a P/E ratio of 21.4x, with analysts' targets ranging from $283 to $365.
The revision follows a report on the recent performance of General Dynamics' Gulfstream business, which showed a significant decrease in aircraft deliveries. In November, Gulfstream delivered a total of 5 aircraft, which included 2 G280s, 1 G500, and 2 G600s. This figure represents a 67% year-over-year decline. Despite these challenges, the company has maintained strong overall revenue growth of 11% over the last twelve months.
The quarterly deliveries to date (QTD) stood at 12 aircraft, which contrasts sharply with the Bloomberg consensus estimate of 53 deliveries for the fourth quarter. Moreover, it falls short of the implied guidance of 61 deliveries for the same period. This QTD total also marks a decrease of 8 units compared to the 20 aircraft that General Dynamics delivered during the corresponding months in 2023.
The analyst noted an unusual pattern in seasonality, highlighting that November deliveries decreased by 2 units month-over-month in 2024, whereas in the previous year, there was an increase of 10 units month-over-month during the same period. This unexpected shift in seasonal trends has been a contributing factor to the lowered price target for General Dynamics. The company's stock performance and future outlook will likely be influenced by its ability to align with delivery expectations and navigate the challenges in aircraft production and delivery.
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In other recent news, General Dynamics has experienced a series of developments. Jefferies lowered its price target from $350.00 to $345.00 due to underperformance in the Aerospace sector and revised Marine margins. However, the company's stock maintains a Buy rating. Jefferies also adjusted its earnings projections for General Dynamics, with the EPS estimate for 2024 reduced to $13.80, and the 2025 forecast set to $15.65.
Simultaneously, Bernstein SocGen Group reduced its price target for General Dynamics to $331 following the company's third-quarter financial results, which fell short of consensus estimates. These results were primarily due to fewer G700 jet deliveries than anticipated and a less optimistic margin forecast in the Marine division.
Meanwhile, RBC (TSX:RY) Capital Markets raised its price target for General Dynamics to $330, maintaining an Outperform rating. This decision was influenced by the company's robust 10% growth in total revenue for the quarter, largely driven by the Aerospace and Marine divisions.
Lastly, in the latest earnings call, General Dynamics reported a 10.4% revenue increase for the third quarter, with earnings of $3.35 per diluted share. Despite challenges, the company maintains a positive outlook for the fourth quarter.
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