General Dynamics: Increasing PO and tweaking estimates ahead of 2Q earnings on Combat

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General Dynamics: Increasing PO and tweaking estimates ahead of 2Q earnings on Combat

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General Dynamics

Increasing PO and tweaking estimates

ahead of 2Q earnings on Combat

Reiterate Rating: BUY | PO: 415.00 USD | Price: 373.54 USD

Contract activity boosting Combat 06 July 2026

GD’s Abrams Engineering program received a $209mn plus-up from the Army. The Equity

adjustment suggests $35mn of incremental revenue annually through 2031. GD was also

awarded a $44mn modification for the Abrams M1A2 System Enhancement Package. In

Key ChangesQ2, GD also received a $450mn award from the US Marine Corps (USMC) for the Pre-

Production Development (PPD) phase of the Advanced Reconnaissance Vehicle (ARV). (US$) Previous Current

ARV’s second iteration targets 2028 deliveries based on the Dept of War’s (DoW) rapid Price Obj. 400.00 415.00

prototyping initiatives. Naval Sea Systems Command (NAVSEA) awarded Mission

Systems a $117mn contract supporting the MK 54 Lightweight Torpedo program. Ronald J. Epstein

Research Analyst

BofAS

r.epstein@bofa.comAero and Marine could also have tailwinds

Following a positive market reaction to 1Q26 earnings, GD shares have been range- Mariana Perez Mora

bound. Iran uncertainty and growing skepticism over the FY27 defense budget process BofAS

has driven volatility. In our view, recent price action is predicated on noise, not signal mariana.perezmora@bofa.com

and 2Q26 earnings may alter this dynamic. Prioritization of US shipbuilding by the Alexander Preston

Trump administration combined with positive momentum on Columbia-class and BofAS

Virginia-class programs point to potential upside in Marine. As mentioned above, alexander.preston@bofa.com

positive contract could boost results in Combat. The Middle East conflict’s impact on