• UBS analyst Myles Walton updated the ratings on General Dynamics Corp (NYSE:GD) and L3Harris Technologies Inc (NYSE:LHX) as part of a broader research note on U.S. Aerospace and Defense.
  • The analyst upgraded General Dynamics to Buy from Neutral and raised the price target to $245 (an upside of 21%) from $220.
  • Walton notes that while growth investors in the space have "left the building," more realistic expectations of mid-to-high single-digit growth are setting in. 
  • The analyst says FY22 could be a grind but with a positive bias as "likely benign" budgetary news, the potential for positive revisions, and rising geopolitical tensions provide some uplift.
  • The analyst downgraded L3Harris to Neutral from Buy and lowered the price target to $235 (an upside of 10%), from $260.
  • Walton notes that while geopolitical tensions are picking up, he sees growth rates in Defense slowing, and he believes that the company's capital return and free cash flow conversion appear to have peaked.
  • Price Action: GD shares are trading lower by 0.27% at $202.95 and LHX lower by 1.62% at $214.41 on the last check Tuesday.