Defense stocks rose. Pentagon calls for doubling missile production - WSJ

Shares of many U.S. defense companies like Lockheed Martin and RTX jumped by 1-5% each in trading on September 29. Investors were buying up their securities amid The Wall Street Journal's report that the Pentagon called on defense contractors to at least double the rate of missile production. However, realizing this may not be so easy, some analysts warn.

At trading on Monday, shares of Lockheed Martin rose at the moment by 2.3%, RTX - by 3%, General Dynamics - by 2.1%, and L3Harris - by 1.6%. Quotes of the manufacturer of drones Kratos Defense jumped by almost 4%, and the securities of the U.S. defense and aerospace company AeroVironment - by 5%, but in the course of trading lost half of the growth. The market value of each of the listed companies has added from 25% to 236% since the beginning of the year. The only exception was Lockheed, whose securities gained only 1% over the same period. Investors fear a slowdown in demand for its F-35 fighter jets, Barron's notes.

The Pentagon has urged companies to double or quadruple the pace of missile production for a potential future conflict with China, The Wall Street Journal reported, citing sources. "President Trump and Defense Secretary Hegseth are discussing extraordinary measures to boost military power and accelerate munitions production," Pentagon spokesman Sean Parnell told the WSJ. - It's a joint effort between defense industry leaders and senior Defense Department officials."

The growth in missile production will open up additional opportunities for key defense contractors, Barron's stresses. For example, Lockheed produces a wide range of weapons - from hypersonic missiles to air defense systems and interceptors. Northrop Grumman is responsible for building the Sentinel intercontinental ballistic missile. RTX manufactures Patriot interceptors, General Dynamics produces both its own missiles and subsystems, and L3Harris supplies components for missile builders.

However, speeding up the process may not be so easy, the WSJ cautioned. For example, it takes up to two years to assemble a single missile, while testing and certification require several more months and hundreds of millions of dollars. "The Donald Trump administration's 'Big and Beautiful' bill provides $25 billion in funding for munitions production over five years." Nevertheless, tens of billions more will be needed to meet the Pentagon's new missile goals, the WSJ emphasized, citing analysts' calculations.

This article was AI-translated and verified by a human editor