Morgan Stanley has identified three aerospace and defense stocks it considers top picks heading into earnings season, with one carrying a price target that implies a double. The bank highlighted FTAI Aviation (FTAI), Northrop Grumman (NOC) and HawkEye 360 (HAWK) as its preferred names, according to a research note published Wednesday. Analyst Kristine Liwag said that while industry fundamentals remain solid, recent volatility and valuation shifts demand greater selectivity.
FTAI Aviation: AI Energy Play
FTAI Aviation, which specializes in maintenance and repairs for the CFM56 jet engine, received a price target of $319, suggesting a 48% gain from Wednesday's open. The company has also launched a business unit to convert retired jet engines into power turbines, aiming to capitalize on AI-driven energy demand. Despite this, FTAI stock is up just 5% year to date and has fallen about 35% from its February all-time high of $325.51.
Northrop Grumman: Defense Budget Boost
Northrop Grumman shares have declined roughly 7% in 2026 and sit 32% below their March peak of $774. Liwag sees a catalyst in the proposed $1.1 trillion defense budget, which she expects Congress to pass. She set a $745 price target for NOC, implying a 40% increase from Wednesday's open, citing elevated geopolitical threats and bipartisan support for higher defense spending.
HawkEye 360: Space Tracking with 100% Upside
HawkEye 360, a space-based radio frequency tracking company that went public in May at $26, now trades near $20. Morgan Stanley assigned a $41 price target, representing more than 100% upside. The company already holds contracts with the National Reconnaissance Office, the U.S. Navy, and foreign governments in India and Europe. Liwag noted that its data analytics overlay creates strong demand, and she expects increased NASA spending related to the International Space Station to further benefit the sector.
All three stocks have been in slumps, which Liwag described as offering an attractive risk-reward. HawkEye 360 rose 3% on Wednesday, while Northrop Grumman and FTAI Aviation posted gains of less than 1%.