[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]
 Stock Talk [@stocktalkweekly](/creator/twitter/stocktalkweekly) on x 322K followers
Created: 2025-07-10 12:08:41 UTC
HUNTINGTON INGALLS $HII upgraded to 'Buy' (from Hold) at TD Cowen, with a $XXX price-target.
Analyst Gautam Khanna says margin upside is sizable and upcoming catalysts are promising:
"(1) Eventual Margin Upside Is Sizable - HII's shipbuilding margin troughed at XXX% in C24, dragged by post-COVID struggles (attrition, low productivity, cost overruns on fixed-price contracts) that are reminiscent of the post-Katrina nadir. HII mgmt asserts that 9-10% ship margin is realistic, as COVID-impacted boats drop as a % of a mix. The margin bogey is plausible, perhaps by C29, given HII's post Katrina history (9% avg over C13-20; XXXX% peak in C16), the Navy's willingness to bear more risk on new contracts, and industry/HII initiatives that should bolster retention and subcontractor performance. We model C25E ship margin of 6%, so the headroom – an eventual XX% margin lift – stands out vs. defense peers that have less of margin gap vs. entitlement.
(2) Upcoming Contracts Seem Promising - HII is in talks for XX VCS Block X subs and X Columbia Class subs (GD is prime), and expects signings by 12/31. These signings could double HII's ship backlog ($42B) by 12/31. HII will commit only if terms inoculate it vs. uncontrollable costs, such as unforeseen labor escalation (NNS union contract expires in '27), supplier inflation, etc. The Navy seems amenable, a sharp contrast to its historical posture, which required sharing or eating of cost overruns. HII is using actual costs experienced during/since COVID as a "baseline" from which to price future work. Ship COGS are split roughly 40%/30%/30% between overhead/labor/suppliers, and labor/supplier costs have risen >30% (our est) since pre-COVID. HII is endeavoring to pare overhead costs ($250MM this year), and there will be negotiation over learning curve (labor hours, etc.). Beyond C25, contract opportunities are CVN-75 RCOH ('26), X more CVNs (advanced procurement; '27), and XX DDGs (circa '28).
(3) Valuation & Broader Context - The Admin has raised threats to defense "incumbents" (DOGE, F-35 cuts, pivot from Europe) but has been supportive of U.S. shipbuilding. For example, HII doesn't seem at risk of major displacement from upstarts/unmanned vessel providers, a contrast to Trump's 1st term. HII's stock trades at a >20% discount to the S&P, despite extended, visible demand, big margin headroom, and huge entry barriers."
XXXXXX engagements
**Related Topics**
[productivity](/topic/productivity)
[$hii](/topic/$hii)
[huntington ingalls](/topic/huntington-ingalls)
[huntington ingalls industries inc](/topic/huntington-ingalls-industries-inc)
[stocks industrials](/topic/stocks-industrials)
[stocks defense](/topic/stocks-defense)
[Post Link](https://x.com/stocktalkweekly/status/1943281216926408907)
[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]
Stock Talk @stocktalkweekly on x 322K followers
Created: 2025-07-10 12:08:41 UTC
HUNTINGTON INGALLS $HII upgraded to 'Buy' (from Hold) at TD Cowen, with a $XXX price-target.
Analyst Gautam Khanna says margin upside is sizable and upcoming catalysts are promising:
"(1) Eventual Margin Upside Is Sizable - HII's shipbuilding margin troughed at XXX% in C24, dragged by post-COVID struggles (attrition, low productivity, cost overruns on fixed-price contracts) that are reminiscent of the post-Katrina nadir. HII mgmt asserts that 9-10% ship margin is realistic, as COVID-impacted boats drop as a % of a mix. The margin bogey is plausible, perhaps by C29, given HII's post Katrina history (9% avg over C13-20; XXXX% peak in C16), the Navy's willingness to bear more risk on new contracts, and industry/HII initiatives that should bolster retention and subcontractor performance. We model C25E ship margin of 6%, so the headroom – an eventual XX% margin lift – stands out vs. defense peers that have less of margin gap vs. entitlement.
(2) Upcoming Contracts Seem Promising - HII is in talks for XX VCS Block X subs and X Columbia Class subs (GD is prime), and expects signings by 12/31. These signings could double HII's ship backlog ($42B) by 12/31. HII will commit only if terms inoculate it vs. uncontrollable costs, such as unforeseen labor escalation (NNS union contract expires in '27), supplier inflation, etc. The Navy seems amenable, a sharp contrast to its historical posture, which required sharing or eating of cost overruns. HII is using actual costs experienced during/since COVID as a "baseline" from which to price future work. Ship COGS are split roughly 40%/30%/30% between overhead/labor/suppliers, and labor/supplier costs have risen >30% (our est) since pre-COVID. HII is endeavoring to pare overhead costs ($250MM this year), and there will be negotiation over learning curve (labor hours, etc.). Beyond C25, contract opportunities are CVN-75 RCOH ('26), X more CVNs (advanced procurement; '27), and XX DDGs (circa '28).
(3) Valuation & Broader Context - The Admin has raised threats to defense "incumbents" (DOGE, F-35 cuts, pivot from Europe) but has been supportive of U.S. shipbuilding. For example, HII doesn't seem at risk of major displacement from upstarts/unmanned vessel providers, a contrast to Trump's 1st term. HII's stock trades at a >20% discount to the S&P, despite extended, visible demand, big margin headroom, and huge entry barriers."
XXXXXX engagements
Related Topics productivity $hii huntington ingalls huntington ingalls industries inc stocks industrials stocks defense