Zacks analyst blog spotlights Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Huntington Ingalls Industries


For immediate release

Chicago, IL – April 6, 2022 – announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Actions recently featured in the blog include: Lockheed Martin LMT, Boeing BA, Northrop Grumman NOC, gGeneral dynamics GD and Huntington Ingalls Industries HII.

Here are the highlights from Tuesday’s analyst blog:

Stocks will benefit from US defense budget increases

The U.S. administration’s fiscal year 2023 budget request includes a $773 billion investment proposal for the Department of Defense (DoD), implying a 4.1% increase over the enacted amount for fiscal year 2022.

This is President Biden’s second budget request and it involves an increased focus on threats posed by China, growing tensions surrounding the Russia-Ukraine crisis and the nuclear modernization program. The budget request is likely to boost growth prospects for U.S. defense majors like Lockheed Martin, Boeing, Northrop Grumman, General dynamics and Huntington Ingalls Industries in the coming days.

Fiscal Year 2023 Budget Highlights

The fiscal year 2023 budget called for $130.1 billion for research and development (R&D), again providing a record spending provision for R&D. This proposal indicates a 16.2% improvement over FY22 demand.

The budget also includes a 4.6% salary increase for soldiers and civilian employees of the Department of Defense, an improvement on the 2.7% salary increase sought in last year’s budget proposal.

The DoD’s fiscal year 2023 budget also identifies China as an enhanced deterrent for the nation in the Indo-Pacific region. In addition, the budget includes investment plans to address aggressive threats from Russia of late, as well as constantly emerging threats posed by North Korea, Iran, and violent extremist organizations.

In particular, the budget proposes to spend $6.1 billion on the Pacific Deterrence Initiative and $4.2 billion on the European Deterrence Initiative, including $300 million for assistance to Ukraine. and support for security cooperation programs in the USEUCOM area of ​​responsibility.

In terms of commodities, the DoD’s fiscal year 2023 budget proposal requests funding worth $56.5 billion for aircraft, $40.8 billion for the navy, $34.4 billion for nuclear modernization, $27.6 billion for space and space equipment, $24.7 billion for missile defense and $12.6 billion for combat. ground vehicles and military tanks.

Actions to win

Given the aforementioned discussion, it is quite evident that US defense stocks will gain significantly, especially those whose products are offered substantial funding in this proposal. We have discussed these stocks below.

Lockheed Martin: The DoD has requested funding worth $11 billion to purchase 61 F-35 Joint Strike Fighter aircraft, $2.6 billion for Ground-Based Midcourse (GMD) and Improved Homeland Defense/Next Generation Interceptors ( NGI), $1 billion for Patriot Advanced Capability Missile Improvement segment and $335 million for Terminal High Altitude Area Defense (THAAD) ballistic missile defense.

Being the largest defense contractor in the United States, the investment proposition in its aforementioned products is expected to boost LMT’s growth. Lockheed Martin currently has a long-term earnings growth estimate of 5.7%.

Boeing: Under the aircraft investment plan, Boeing’s products got most of the financing proposals, except for LMT. Notably, the DoD requested an investment of $2.9 billion for the purchase of 15 KC-46 tankers and $2.8 billion for 24 F-15EX jets.

In addition to being the largest commercial aircraft manufacturer in the United States, BA has a strong position in combat aerospace and the aforementioned award would help it maintain the same position. Boeing currently has a long-term earnings growth estimate of 4%.

Northrop: DoD’s latest budget proposes spending $5 billion on the B-21 Long Strike bomber, $3.6 billion on ground-based strategic deterrence (GBSD), and $1.7 billion on new air dominance generation (NGAD). Additionally, the $11 billion in funding that has been allocated for the purchase of F-35 aircraft will increase NOC’s revenue, as the company is a contractor to the F-35 program.

Northrop currently has a long-term earnings growth estimate of 6.2%.

In addition, leading shipbuilders General Dynamics and Huntington Ingalls will be winners considering that they are jointly building DDG-51 class destroyers and Virginia class submarines, which received funding from 5 $.6 billion and $7.3 billion, respectively, in the fiscal year 2023 budget.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit for more information on the performance figures displayed in this press release.

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