General Dynamics (GD) is well-positioned to benefit from growing defense spending as it navigates the new procurement landscape, but cautious margin commentary is weighing on sentiment, RBC Capital Markets analysts said in a Wednesday note.

Analysts said that demand across defense and Gulfstream remains solid with a Q4 book-to-bill of 1.6x.

They note, however, that a weaker Aerospace 2026 margin forecast and delivery growth are weighing on the stock.

RBC said that while the company has not withdrawn its high-teens Aerospace margins, the impact from lingering supply chain, certification, and tariff on margins has been wider than expected.

RBC said that General Dynamics reported strong Q4 results, posting a 1% earnings beat, offset by a weaker 2026 outlook compared with expectations.

RBC analysts maintained a sector perform rating on the stock and a $385 price target.

Shares of the company were down 1.5% in recent Thursday trading.

Price: 351.94, Change: -4.75, Percent Change: -1.33