Street View: Flat margins and tariff risks for General Dynamics

General Dynamics GD.N reported a 27% rise in first-quarter profit on Wednesday, driven by recovery in its aerospace segment as well as sustained strength in its defense business.

Average recommendation of 25 brokerages is "buy", median PT is $285 - data compiled by LSEG

ON THE FENCE

RBC Capital Markets ("sector perform", PT: $280) expects Marine and Combat profit margins to stay flat and sees the FY26 budget request as a potential negative for sentiment

"We agree that the potential tariff impact on defense is limited, but any visibility on the tariff impact on Aerospace is necessary for increased investor confidence in the Aerospace upside" - RBC

Morgan Stanley ("equal-weight", PT: $300) sees slightly higher risk for GD related to the Department of Government Efficiency and tariffs compared to other Prime peers like Lockheed Martin Corp LMT.N, and Northrop Grumman Corp NOC.N

J.P. Morgan ("overweight", PT: $284) says the business jet market is strong and expects Gulfstream's profit margins to improve next year

Morningstar (fair value: $313) says "we don't think General Dynamics is especially vulnerable, though its technologies contracts are shorter-cycle and slightly less moaty than the manufacturing divisions' long-cycle programs"