It’s time to buy U.S. military shipbuilder Huntington Ingalls Industries , JPMorgan said. The bank upgraded the military shipbuilding company to overweight from neutral in a Thursday note, although lowered its price target to $247 from $250. JPMorgan’s forecast implies nearly 22% upside from Wednesday’s $203.19 close. Huntington Ingalls shares have struggled this quarter, losing 10.7% in that time. However, analyst Seth Seifman sees this as a buying opportunity for investors. HII 3M mountain Huntington Ingalls Industries in past 3 months The stock has fallen “on little news, and while it has been a tough market for Defense stocks, we see this as an attractive entry point, with top line visibility, potential for margin self-help, and a pick up cash flow and cash return coming next year,” Seifman said. The analyst added that the company will also benefit from a $42 billion backlog in shipbuilding, which is further accelerated by Huntington’s standing as one of only two main Navy builders. “While budget growth will be more muted from here, much of what has been approved in recent years has not yet shown up as revenue and earnings. Total Navy Procurement spending the past 12 months is still 17% below the FY23 budget, the biggest Procurement gap among the three armed services and the reason is shipbuilding, where the gap should be wider,” he said. “This is not new news in such a long cycle business but the unchanged outlook for the business accompanied by a decline in the stock contribute to our view that this is an appealing entry point.” Analysts are split on the stock, with just five rating it a buy or a strong buy, Refinitiv data shows. Five others have hold ratings on it, and two others rate it as underperform. — CNBC’s Michael Bloom contributed to this report.
