Investing.com -- BTIG downgraded General Dynamics Corporation (NYSE:GD)to Neutral given the ongoing regulatory hurdles and supply chain disruptions that could hamper growth in 2025.
The brokerage highlighted weaker-than-expected Gulfstream deliveries, with just 15 G700 jets delivered in Q4 2024, well below the company’s forecast of 27.
Certification delays and supply chain bottlenecks have impeded its production and deliveries with BTIG now expecting GD to reach 167 total aircraft deliveries only by 2027, instead of 2025.
Marine Systems, a key segment for GD, continues to face margin pressure despite robust sales growth, as supply chain challenges and rising labour costs weigh on profitability. Additionally, BTIG flagged concerns over free cash flow conversion, which is projected at 80-85% for 2025—short of GD’s ~100% target.
BTIG’s valuation model assumes a 12.3% discount rate and a terminal growth rate of 2%, leading to a price target implying a 13x multiple on GD’s estimated 2026 EBITDA. While defense spending growth and aerospace sales provide some upside, the lack of a clear catalyst prompted the downgrade.
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