General Dynamics (GD) Stock Forecast & Price Target

General Dynamics exhibits a notably positive outlook driven by strong performance across its segments, particularly in the Aerospace sector, which reported a year-over-year service growth guidance of high-single digits for 2025 and a solid increase in fractional-owned aircraft operations. The company's total revenue for the quarter increased by 14% to approximately $13.3 billion, outpacing consensus estimates by 4%, while the Marine Systems segment achieved revenue growth of 16%, exceeding expectations by 11%. Furthermore, General Dynamics has consistently indicated significant margin improvements, projecting an increase from 12.8% in 2022 to approximately 15.8% in 2024, underscoring its efficiency and profitability potential within the defense and aerospace markets.

General Dynamics faces significant challenges leading to a negative outlook on its stock, including total revenue growth projected at only 5.4% year-over-year and a concerning decline in free cash flow conversion rates to 80-85%, which is substantially below the historical average of around 100%. The aerospace segment specifically is experiencing operational difficulties, with lowered expectations for operating margins to 6.9% for 2024 and a slowdown in Gulfstream deliveries contributing to overall underperformance. Additionally, risks stemming from potential shifts in defense spending, especially related to Ukraine aid, coupled with persistent supply chain issues in the marine sector, further complicate the business landscape for General Dynamics.