Northrop Grumman (NYSE: NOC) was downgraded to Hold from Buy by Truist Securities.

The firm said it continued to believe Northrop Grumman would retain its leading prime contractor positions across the nuclear triad and several other high-demand defense platforms. Truist also expected potential upside from higher B-21 bomber unit volumes, a possible win on the F/A-XX program, and a likely role for the company's Integrated Battle Command System within the Golden Dome initiative.

Despite these positives, the analyst said the stock's valuation and recent performance already reflected much of this upside and did not appear to fully account for potential margin pressure and free cash flow risks. Truist said it expected the company's initial 2026 outlook to be largely reaffirmed, with the possibility of modest improvement, but saw limited scope for further upside to financial results over the next 12 to 24 months.

The firm noted that Northrop Grumman shares were trading at a roughly 20% premium to prime defense peers on a price-to-free-cash-flow basis and at a 28% premium relative to the company's own historical average free cash flow multiple. Based on these factors, Truist said it expected the stock to be a relative underperformer in 2026.