UBS Sees Improving Demand Across General Dynamics' (GD) Core Businesses

General Dynamics Corporation (NYSE:GD) is included among the Dividend Growth Stocks: 25 Aristocrats.

On January 29, UBS lifted its price target on General Dynamics Corporation (NYSE:GD) to $393 from $388 while keeping a Neutral rating on the stock. The firm said demand is improving across most of the company’s businesses, with Gulfstream, Combat Systems, and Marine Systems standing out. That momentum is supporting free cash flow growth, even as capital spending rises sharply. UBS added that while General Dynamics has a long runway for earnings growth, margin trends and cautious guidance led the firm to leave its estimates largely unchanged, noting that broader market expectations may need to cool.

A day earlier, General Dynamics reported fourth-quarter profit and revenue that topped estimates, helped by strength in its combat and marine systems units. Even so, the company issued a full-year profit outlook that came in below Wall Street forecasts. Management expects annual earnings of $16.10 to $16.20 per share, compared with the consensus estimate of $17.29 per share, according to LSEG data.

During the post-earnings call, President Danny Deeb said the impact of U.S. tariffs in 2026 is expected to exceed the $41 million recorded in 2025, adding that those higher costs have already been factored into the company’s margin outlook.

The Marine Systems business continued to recover from earlier supply chain issues and labor shortages, with productivity improving during the quarter. Meanwhile, the Combat Systems segment benefited from rising international demand, particularly in Europe, as ongoing geopolitical tensions and global conflicts supported higher sales of vehicles, weapons, and munitions. Orders also remained strong, with quarterly bookings running at 1.6 times billings, highlighting the depth of General Dynamics’ backlog.

General Dynamics Corporation (NYSE:GD) is a global aerospace and defense contractor with a broad portfolio that also includes business aviation products and services.

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