Aerospace, Defense Stocks' Demand Intact Despite Softer Sentiment, Morgan Stanley Says

11:05 AM EDT, 10/16/2026 (MT Newswires) -- Aerospace and defense stocks face softer sentiment, but demand is still intact, Morgan Stanley said in a Friday note. Commercial Aerospace stocks face demand concerns amid higher oil prices and geopolitical uncertainty, but the market is overestimating these concerns, according to the note. Morgan Stanley said it sees attractive opportunities ahead of earnings, particularly in GE Aerospace (GE) and Howmet Aerospace (HWM). On defense stocks, the investment firm said the market is too focused on budget uncertainty and the upcoming US midterm elections relative to underlying demand strength. "We believe investors are losing sight of the fact that the debate is about how much defense spending increases, not whether spending declines," Morgan Stanley said, adding it favors Northrop Grumman (NOC) over others in the sector. Morgan Stanley upgraded Moog's (MOG.A) rating to overweight from equal-weight and raised the price target to $448 from $405. The firm lowered Boeing's (BA) price target to $225 from $250, but retained an equal-weight rating. Price: 320.25, Change: +8.25, Percent Change: +2.64