Which 6 Defense Stocks Did A BofA Analyst Raise The Price Targets?

Against the backdrop of the Russia-Ukraine conflict, the U.S. defense budget could increase to 3.5% to 4% of GDP, according to BofA Securities.

The Defense Analyst: Ronald Epstein reiterated the ratings for defense stocks while raising their price targets.

• L3Harris Technologies Inc LHX: Buy; Price target raised from $238 to $285.
• Northrop Grumman Corporation NOC: Buy; Price target raised from $520 to $540.
• Lockheed Martin Corporation LMT: Neutral: Price target raised from $410 to $485.
• Huntington Ingalls Industries Inc HII: Buy; Price target raised from $200 to $230.
• General Dynamics Corporation GD: Buy; Price target raised from $250 to $280.
• Raytheon Technologies Corp RTX: Buy; Price target raised from $110 to $115.

The Defense Thesis: The U.S. defense spending is expected to reach $800 billion in fiscal 2023 and exceed $900 billion by fiscal 2025, Epstein said in the note.

“We expect the NATO 'soft' target for defense spending (2% of GDP) to become a 'firm' target or floor. Currently, only four countries meet this target; there are 20+ more to go,” the analyst wrote.

“Our UK analyst Benjamin Heelan expects more governments to announce plans to meet the 2% of GDP NATO targets. The European economics team expects that if all Euro area countries (also those not in NATO) were to reach a 2% spending threshold in terms of Nominal GDP, the additional expenditure would be ~€50-80bn higher in 2022 and €100-120bn higher in 2023,” he added.

Photo: Courtesy Lockheed Martin (on Flickr)