Investing.com -- Deutsche Bank struck an optimistic tone on the aerospace and defense sector entering 2025, citing improving production momentum at Boeing (NYSE:BA) and robust demand for key suppliers.
The bank upgraded RTX to "buy" with a $140 target, pointing to its strong aerospace growth and international defense exposure. Boeing, also rated a "buy," was highlighted for its cleaner balance sheet and operational momentum post-strike, with potential upside from international orders spurred by trade policies.
GE Aerospace was named the top aftermarket pick, supported by double-digit aftermarket growth expectations and a favorable valuation.
Among suppliers, Carpenter Technology (NYSE:CRS) and Howmet Aerospace were top ideas, driven by tight supply-demand dynamics and pricing power in niche markets. CRS has a 49% upside potential to its $250 price target, Deutsche Bank (ETR:DBKGn) said.
In defense, the note maintained a mixed outlook, acknowledging underperformance relative to the S&P 500 despite geopolitical tensions. However, expectations of accelerated budget growth in 2026 and trough-level valuations led the bank to be cautiously positive.
RTX, Northrop Grumman (NYSE:NOC) were named as preferred defense stocks, while Lockheed Martin (NYSE:LMT) was downgraded to "hold."