Northrop Grumman Corporation (NYSE:NOC) saw its stock battered last year - and now it's a good time to buy, according to Credit Suisse.

The Analyst

Credit Suisse analyst Robert Spingarn upgraded Northrop Grumman to Outperform from Neutral, with a price target lowered from $311 to $302.

The Thesis

Northrop looks like a good value because it’s stock dropped more than 20 percent last year – after having been overvalued in Spingarn’s opinion. The sell-off has created a buying opportunity for what used to be one of the more expensive defense stocks, Spingarn said.

“With 2018’s market correction, NOC now has one of the most well supported valuations among the defense primes,” he wrote in a note to investors on Monday.

Falls Church, Va.-based Northrop is well-positioned in the country’s national security scheme, with its cutting-edge tech focus more in line with the direction the American military is moving than it has been in the past, Spingarn wrote. Credit Suisse cited the company’s Common Infrared Countermeasures program as an example of a relatively small, but significant high-tech product it expects to see revenue ramp on over the next several years. The CIRCM is a hardware package for military aircraft that blocks incoming heat-seeking missiles.

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Among the other projects that will likely lead to strong revenue growth in coming years are the F-35 aircraft, on which Northrop Grumman is a key supplier and the Air Force’s B-21 Raider stealth bomber, which Spingarn said is one of Northrop’s “most compelling longer-term growth opportunities.”

It also could see a chance to get into new defense work lines resulting from its 2017 acquisition of Orbital ATK. New types of work that might be good for Northrop Grumman investors because of that acquisition could include work in space technology, including launch vehicles and propulsion, as well as missiles and missile defense systems, the Credit Suisse note said.

Price Action

Northrop Grumman's stock was up 1.6 percent to $260.25 at time of publication.

Photo courtesy of Northrop Grumman.