Northrop Grumman (NOC) could see about 6% revenue growth from 2026 through 2028, but slower US defense budget growth, limited international exposure, margin pressure and fewer options to boost shareholder returns could restrict further upside, RBC said in a note Friday.

Future revenue gains will depend mainly on the B-21 bomber, space programs and solid rocket motors, although these areas could require more investment and limit margin improvement in 2027 and 2028 as higher investment needs and lower production from older programs could offset benefits from international sales and better execution.

The investment firm said it expects the B-21 program to grow to at least 150 aircraft as its role expands, but said the program is likely to remain a drag on margins in the near term.

Real US defense spending is expected to grow at a low-single-digit rate from fiscal 2028 through fiscal 2031, while major Northrop programs such as B-21, Sentinel, missile defense, radar and electronic warfare should remain supported.

RBC lowered Northrop Grumman to sector perform from outperform and cut its price target to $525 from $640, saying growth similar to peers does not support a higher valuation.

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