Huntington Ingalls Industries’ (NYSE:HII) stock is likely to rise in value, analysts at investment research firm Hedgeye said on Wednesday. They said the shipbuilder is poised for gains as countries increase their spending on military equipment.
“We see approximately 30% upside for Huntington Ingalls (HII) as it has a great cyclical set-up,” Jay Van Sciver, analyst at Hedgeye, said in a May 31 report. “Increased tensions in the Pacific and a resurgent NATO will drive necessary investments and disinflation with help margins.”
The war in Ukraine and worries that China will invade Taiwan have pushed countries to increase defense spending. The United States is in the final stages of approving a debt-ceiling bill that includes a bigger budget for defense.
“We see defense names, which are now less expensive, as likely outperformers in this increasingly unstable macro and geopolitical environment,” according to Hedgeye. “A budget deal and the start of the ’24 election cycle could move the group back into a longer-term positive trend.”