Wall Street is anticipating the inauguration of President-elect Donald Trump and contemplating what potential impacts the Department of Government Efficiency, led by Elon Musk and Vivek Ramaswamy, may have on defense contractors.
Truist Securities analyst Michael Ciarmoli is optimistic on the defense sector and initiated coverage on Lockheed Martin Corp.
DOGE-related fears are "overblown," Ciarmoli said, adding that the recent pullbacks in both defense contractors' stocks have led to attractive entry points at current levels.
Ciarmoli highlighted DOGE's role as only an advisory board and noted that lawmakers and the appropriations committee still "call the shots" on budget and spending decisions. He also said Truist sees U.S. and NATO defense budgets increasing in 2026.
The Truist analyst sees Northrup Grumman's anchor nuclear triad B-21 Raider and Sentinel GBSD programs providing stability and growth. Ciarmoli also said U.S. and NATO defense spending will continue to grow and demand for missiles and munitions will be robust.
LMT, NOC Price Action: According to Benzinga Pro, Lockheed Martin shares are down 2.2% over the past month and Northrup Grumman shares are down 2.3% over the same period.
