Huntington Ingalls Industries (HII) will benefit from macroeconomic strength in the shipbuilding sector, which is offsetting "idiosyncratic margin and execution challenges" at shipyards, BofA Securities said in a note Thursday.
The investment firm said it expects the "vast amount of money flowing into the industry to continue to bolster [Huntington] government support for the maritime industrial base to alleviate some labor and supply chain challenges."
The company will likely see stronger revenues and profit as the US Navy awards Virginia Class Block VI, the new frigate program is maturing, and plans are being finalized for the Trump-class battleship, BofA said.
"US priorities continue to propel the defense industrial base through a 'golden age for shipbuilding'," the note said.
BofA upgraded Huntington to neutral from underperform and lifted its price target to $400 from $300.
Huntington shares were up 3% in recent trading.
Price: 403.92, Change: +11.22, Percent Change: +2.86
Comments