RBC says Northrop favorite for Navy F/A-XX award after Lockheed ‘setback’

After the White House and the Department of Defense announced they have selected Boeing (BA) for the Next Generation Air Dominance contract to develop the Air Force’s sixth-generation fighter to be referred to as the F-47, RBC Capital believes the contract award is “a bit of a surprise for investors.” The firm views the award as a signal from the U.S. Air Force that it wants to ensure at least two fighter companies in the industrial base, with Lockheed Martin (LMT) for the F-35, now Boeing for the F-47, and Northrop Grumman (NOC) as the prime contractor for the B-21. For Lockheed, the firm believes the USAF is signaling that the company’s focus needs to remain on the F-35 in the near-term, says the analyst, who also believes this award will now make Northrop the favorite for the Navy’s F/A-XX award. RBC has Outperform ratings on Lockheed and Boeing and a Sector Perform rating on Northrop Grumman.