The U.S.-Israeli joint military campaign against Iran has put a spotlight on drone and missile technologies, leading analysts from Citigroup to reiterate their bullish views on companies involved in mission-critical defense systems. The bank’s analysts examined evidence that suggests a recent slowdown in the frequency of Iranian missile and drone attacks since the start of the conflict, but the firm said the long-term investing case in defense plays remains intact. Analyst John Godyn said that the war has put investor attention on Citi’s buy-rated defense names, including Karman Holdings , L3Harris Technologies and RTX . “Notably, news reports and data suggest that drone strike activity has stayed more elevated than missile launches for longer, but even drone strikes appear to be receding. Despite this recent slowdown, there is no question that the events refocused investors on missile defense, munition replenishment and counter-UAS (drones), which all tie to megatrends driving a number of our Buy rated stocks,” Godyn wrote in a Wednesday report to clients. Karman Holdings is a defense contractor with plenty of momentum ahead, according to Citigroup. The company went public in February 2025, and offers a variety of products and services including aerodynamic interstage systems and propulsion and launch systems. Citigroup has a $125 price target on Karman, which suggests 28% potential upside. That’s more bullish than the consensus $114 price target among analysts polled by LSEG. “The stock is High Risk based on Citi’s quantitative model; however, in our view, the company has particularly robust EBITDA margins and visible growth. As such, a High Risk rating has not been applied,” Godyn wrote about Karman. Shares of Karman are up 33% year to date, benefiting from increased demand and U.S. government awards. On Monday, Karman said it will open a new Utah factory for advanced manufacturing of high volume loitering missile and counter-UAS launch systems, and critical nozzle assemblies for solid rocket motors. Defense prime contractor L3 Harris is another buy-rated defense stock Citigroup highlighted. The bank’s $418 base case price target on the stock implies it has almost 17% potential upside. Shares are up about 22% this year, benefiting from U.S. government investment earlier this year. The Pentagon in January committed to a $1 billion convertible preferred equity investment in L3Harris’ Missile Solutions business, with the goal of expanding production of U.S. solid rocket motors. The motors are used in a wide range of missiles, like Tomahawks and Patriot interceptors, which have been used against Iranian missiles and drones. L3Harris has said it is planning an IPO of its rocket motor business in the second half of 2026, backed by the $1 billion investment.