UPDATE: Deutsche Bank Upgrades Northrop Grumman Corporation

Analysts at Deutsche Bank upgraded shares of Northrop Grumman Corporation NOC to a Buy rating and $140 to $145 price target.

Myles Walton outlined reasons for the upgrade:

Future increases in defense spending. Analysts feel that defense spending is bottoming as global tensions rise along with a shift in public sentiment on threats and priorities.

Northrop Grumman has the highest expose to the United States with over 86 percent of sales tied to the U.S. government. Consequently, a turn in defense spending will benefit Northrop Grumman more than its peers.

Lastly, the company returns 100 percent of free cash flow to its shareholders. Northrop increased its dividend by 15 percent in May and has bought back 17 million shares year to date. In addition, the company has retired 30 million shares and plans to retire 30 million more shares by the end of 2015.

Shares of Northrop Grumman closed Thursday at $128.90