Citi analyst Jonathan Raviv resumed coverage of Northrop Grumman (NOC) and upgraded the shares to Buy from Neutral. The pending Orbital (OA) acquisition changes the story in Northrop's favor by enabling modest margin expansion while the company maintains attractive growth, Raviv tells investors in a research note. The analyst raised his price target for the shares to $405 from $280.

Says "pleased with cash performance" in Q1. Expects strong cash generation in Q2. Says "committed" to "strong and growing dividend." Remains "upbeat" on long-term prospects.

Says strong global defense budget outlook; broad portfolio well aligned to customer priorities; robust long-term cash flow outlook. Expects greater than $2B in share repurchases in 2024. Says "laser focused" on performance, driving cost efficiencies in the business. Comments taken from Q1 earnings conference call.

For 2024 sees: Aeronautics Systems sales mid $11B, OM rate mid 9%; Defense Systems sales ~ $6B, OM rate low to mid 12%; Missions Systems sales low to mid $11B, OM rate high 14%; Space Systems sales low to mid $14B, OM rate ~9%; Eliminations ~($2.3B), OM rate high 13%. Prior view: Aeronautics Systems sales low $11B, OM rate mid 9%; Defense Systems sales ~ $6B, OM rate low 12%; Missions Systems sales low to mid $11B, OM rate ~ 15%; Space Systems sales mid to high $14B, OM rate ~9%; Eliminations ~($2.3B), OM rate high 13%. Comments taken from investor presentation slides. Comments taken from investor presentation slides.

Backs FY24 free cash flow view $2.25B-$2.65B.

FY24 consensus $24.65. Backs FY24 revenue view $40.8B-$41.2B, consensus $41.11B.