Analyst Ronald Epstein of Bank of America Securities reiterated a Sell rating on Huntington Ingalls (HII – Research Report), reducing the price target to $165.00.
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Ronald Epstein has given his Sell rating due to a combination of factors impacting Huntington Ingalls Industries (HII). Primarily, despite strong demand signals from the Navy, the company faces significant execution challenges which have overshadowed these positive indicators. The stock’s substantial decline following earnings announcement reflects investor concerns over these issues, suggesting that they may have underestimated the complexity of these challenges.
Furthermore, the company’s efforts to improve throughput and address workforce inefficiencies, such as increasing outsourcing and focusing on skilled labor, are acknowledged but are expected to take time before showing results. Additionally, HII’s tendency to delay key project milestones contributes to investor caution, and uncertainties around its future capital allocation, particularly regarding share repurchases and capital expenditure, add to the underperform rating. Until HII demonstrates the ability to adhere to its schedules and improve execution significantly, the Sell rating remains justified.
In another report released on February 7, Goldman Sachs also maintained a Sell rating on the stock with a $145.00 price target.