Lockheed Martin, Other Defense Stocks Soared. Why the Rally Could Have Legs.

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Lockheed Martin, General Dynamics, and L3Harris rose further in early Tuesday trading after a jump on Monday.

Major defense stocks including Lockheed Martin added some $23 billion in market capitalization Monday following weekend attacks by Hamas against Israel. Now Wall Street is working through details to see what might come next for the sector—and most see opportunity.

“Our view remains that, presuming the Israel-Hamas war does not become a regional war, the impact on defense fundamentals should be limited,” wrote Capital Alpha analyst Byron Callan in a Tuesday report. “Hamas won’t be resupplied with military equipment or materials to make weapons. We expect an intense Israeli operation to bring about the defeat of Hamas as quickly as possible.”

“The Israel-Hamas crisis is apt to bolster support for U.S. military spending with focus on tactical ground warfare scenarios. This would favor fighter aircraft, tactical missiles, , radios, air defense, helicopters, and vehicles,” he wrote Tuesday. “But given that production of most of these items already is in a ramp, the crisis likely won’t produce much incremental sales or profits for contractors over the next two years.

“We don’t see a practical tactical trade in Defense as a result of the attack on Israel,” wrote Seaport analyst Richard Safran. There isn’t a specific company or part of the defense industry he sees benefiting more than others. Still, he likes the sector. The stocks are attractive.

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Lockheed Martin, Northrop Grumman Stocks Notch Best Days In Years Amid Israel-Hamas ConflictI'm a New Jersey-based Senior Reporter on our news desk. I graduated in 2021 from Duke University, where I majored in Economics and served as sports editor for The Chronicle, Duke's student newspaper. Send tips at dsaulforbes.com.
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