The second presidency of Donald Trump has brought quite a shake-up to the financial markets. While some industries, like cryptocurrency, have turned unequivocally bullish on account of the President’s support, others seem to be stuck in limbo — and defense is one such sector.
Since Trump’s reelection, defense stocks have generally underperformed the wider market on account of uncertainty as to what Trump’s second term could bring. While he is unlikely to cut the U.S. defense budget, the Department of Government Efficiency (DOGE), headed by Elon Musk, has previously taken aim at longstanding programs, such as the F35 jet.
In addition, Trump’s defense secretary pick, Pete Hegseth, criticized the Pentagon for becoming too insular — emphasizing the need for faster weapon development through competition and citing Silicon Valley as a positive example.
Picks for you
On top of that, Trump appears to have adopted a more hawkish foreign policy stance as of late — as suggested by his expansionist ideas concerning Greenland, Canada, and the Panama Canal.
While the short-term outlook of the sector is still uncertain, one of Wall Street’s premier investment banks — Citigroup (NYSE: C) has taken a bullish turn. Equity research analyst Jason Gurski has highlighted 4 stocks that stand to benefit from a change of pace in the White House.
V2X Inc. (NYSE: VVX)
Unlike most other entries on the list, V2X Inc. (NYSE: VVX) isn’t what you’d typically expect from a defense stock. The business handles supply chain management, logistics, infrastructure, and IT support for the military.
The Citigroup researcher initiated coverage on VVX stock with a ‘Buy’ rating and a $64 price target. In a note shared with investors, Gurski highlighted how the administration’s intent to shrink government headcount could lead to more outsourcing — a tailwind for V2X.
Citi also noted the company’s recent merger, the appointment of a new Chief Growth Officer, stable margins, and a compelling valuation as reasons behind the positive rating.
At press time, VVX stock was trading at $52.89, after a 10.58% surge since the beginning of the year. Citigroup’s price target sees a 21% upside for the stock.
Curtiss-Wright Corp (NYSE: CW)
Citi initiated coverage on the Curtiss-Wright Corp (NYSE: CW) with a ‘Buy’ rating and a $410 price target. As an interesting aside, the Wright in the company’s name comes from the Wright brothers — and the business has maintained a cutting-edge level of technical expertise since its founding in 1929.
In a note shared with investors, the analyst highlighted that Citi sees a path for the company to become net cash positive by 2026 given its consistent pattern of de-levering the balance sheet, which is supported by its outlook for 13% earnings growth through 2027 and consistent cash conversion.
The firm expects the Department of Defense’s spending trends and initiatives that prioritize Aircraft, Shipbuilding, and C4I spending to drive defense end-market revenues.
As of the time of publication, CW stock was trading at $375.53, having rallied by 5.82% since the start of the year — Citi’s $410 price target represents a 9.17% upside.
RTX Corporation (NYSE: RTX)
The RTX Corporation (NYSE: RTX) is much better known under the name it used before rebranding — Raytheon. The aerospace giant is the second-largest defense contractor in the United States. Although primarily associated with aerospace, RTX has branched out into intelligence, cyber defense, and a host of other areas.
Gurski upgraded RTX stock from ‘Neutral’ to ‘Buy’, and increased his price target to $153 from $132. While slightly cautious regarding the presidential transition, Citi is confident that demand from Europe can buoy defense stocks such as RTX — in addition, the firm expects to hear positive commentary from commercial aftermarket suppliers in Q4.
Finally, the analyst added that, at present, RTX stock is trading at a compelling valuation on more normalized fundamentals.
A single RTX share was changing hands at a price of $122.57 as of January 21. On a YTD basis, the stock has rallied by 5.92% — and Citi’s $153 price target equates to a 24.82% upside.
Northrop Grumman (NYSE: NOC)
Finally, Gurski upgraded Northrop Grumman (NYSE: NOC) to ‘Buy’ from a previous ‘Neutral’ rating. However, Citi’s price target for NOC stock remains unchanged, at $587.
Following the selloff that NOC stock has seen in the immediate aftermath of the election, Citigroup believes that the business is now trading at a fair valuation. At press time, the stock’s trailing price-to-earnings (PE) ratio stood at 29.75 — while its forward PE was an appealing 17.19.
In addition, Gurski noted that investors have, in general, become too cautious on the outlook for defense stocks.
At the time of writing, NOC stock was trading at $488.10, having rallied by 4.01% since the start of 2025, and Gurski’s price target represents a 20.26% upside.
While Citi is bullish on these 4 stocks, readers should note that the Trump administration is announcing sweeping changes — and that defense stocks are particularly vulnerable to political factors.
Featured image via Shutterstock
