Stifel upgrades Northrop Grumman to buy, says defense stock can jump nearly 30%

Technicians make final preparations for Northrop Grumman's full-scale static fire test of the first stage of OmegA, the company's new intermediate/heavy-class rocket, in Promontory, Utah, May 30, 2019.
George Frey | Reuters

Investors should buy Northrop Grumman because defense industry stocks are cheap and the market will eventually realize it, according to investment firm Stifel.

Shares of the company have gained 20% year to date but have underperformed the broader market over a longer time period.

Analyst Joseph DeNardi upgraded the defense stock to buy from hold, saying in a note to clients on Thursday night that the market was too bearish on the outlook for the industry.

More In Street Calls

CNBC ProChina's Gen Z are set to spend big – analysts pick 3 stocks that could be winners
CNBC ProHere are Monday's biggest analyst calls of the day: Wendy's, Microsoft, FedEx, Peloton, Tesla & more
CNBC ProWall Street analysts are split on what's next for Oatly's stock