Northrop Grumman (NOC) is well-positioned to benefit from the US Department of Defense's nuclear modernization priorities, RBC Capital Markets said Thursday.

The brokerage said it sees relative positive investor sentiment on the stock and better funding opportunity for B-21 Raider and Sentinel programs under US President Donald Trump's 2026 Presidential budget request as positive catalysts. It added that the company will likely secure the US Navy's F/A XX contract and projects in the Golden Dome program as the DoD plans to maintain a diversified industrial base.

Northrop Grumman could generate between $3.12 billion and $3.48 billion of free cash flow this year and in 2026, respectively, on track to its guide of almost $4 billion in 2028, according to the analysts.

The analysts said that their "thesis recognizes the better-than-peer revenue growth outlook and the company's position in key markets, such as space, nuclear recapitalization, and classified markets."

RBC noted it upgraded the company's rating to outperform from sector perform and raised its 12-month stock price target to $575 from $500 per share.

Price: 516.70, Change: +9.56, Percent Change: +1.89