UPDATE: RBC Capital Downgrades General Dynamics

Analysts at RBC Capital on Wednesday downgraded General Dynamics GD from Outperform to Sector Perform and setting a $150 price target.

Analysts believe it will be difficult for General Dynamics to replicate its strong 2014 performance.

General Dynamics stock was down 0.5 percent at around $135. RBC Capital’s $150 price target represents about a 10.1 percent upside for the stock from current levels.

Valuation Call

RBC Capital explained that its downgrade was a valuation call. Shares of General Dynamics are up 43 percent over the past year. At current levels, the stock’s price-to-earnings-to-growth ratio (PEG) of 2.2 is high enough to make value investors wary.

RBC Capital analysts believe that General Dynamics’ stock has risen to a point where competitors offer a better valuation. Lockheed Martin LMT and Raytheon RTN both currently have PEG ratios under two.

Other Analyst Action

Earlier this week, Deutsche Bank reiterated its Buy rating on General Dynamics and raised its price target from $150.00 to $162.00. Back in December, Citigroup reiterated its Buy rating and raised its target from $150.00 to $159.00.