12:29 PM EDT, 10/15/2025 (MT Newswires) -- US defense companies including Northrop Grumman ( NOC ) and Lockheed Martin ( LMT ) are poised to report Q3 results amid the ongoing government shutdown, which may hinder management teams from offering clear 2026 guidance, Morgan Stanley said in a Wednesday report.

Analysts see the ongoing shutdown as a buying opportunity for defense stocks, noting that the impact of the shutdown depends on its duration and that the sector could see "added challenges" if the shutdown continues long-term.

Morgan Stanley highlighted rare earths supply as a potential risk for defense companies, citing recent US-China tensions and plans for a domestic supply chain by 2027.

The firm has Northrop as its top pick in defense and said it also favors Lockheed Martin ( LMT ) as a "relative value play."

Morgan Stanley raised its price target on Northrop to $720 from $625 and boosted its price target on Lockheed to $630 from $530 while maintaining an overweight rating on both stocks.

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