Defense Primes — United States

US President Donald Trump signed into law a Russia sanctions bill on Friday, September 18. The law grants authority to expand sanctions, impose customs duties and various prohibitions against Russia, while renewing existing sanctions on Iran. The law, named the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, imposes sanctions on Russian officials, Russian banks and vessels used to transport energy from Russia, and gives Trump the authority to levy tariffs of up to 100% on goods from the five countries that import the most oil or natural gas from Russia. It also extends the Iran Sanctions Act for another five years to maintain sanctions targeting Iran's energy and weapons sectors. The US House of Representatives passed the bill on Wednesday, September 16, after the Senate approved it on August 7. The law is a major achievement carrying on the legacy of Lindsey Graham, the former senator who championed the bill and died in July after a sudden illness. However, the bill faced more division in the House than in the Senate, with three Democratic members of the House saying in a joint statement recently that the law may do more harm than good because it greatly increases Trump's power to set tariffs but does not compel him to impose sanctions on Russia.

US President Trump said on the 18th that he had reached an agreement with Denmark granting the United States "permanent control" over the security of Greenland, a Danish autonomous territory. Trump announced the agreement on social media, describing it as addressing "all of the many concerns" held by the United States and saying it would cost the United States "nothing at all." According to US government officials, the new agreement explicitly prohibits non-NATO countries from establishing military bases in Greenland and restricts investment in the island that is viewed as a threat to the United States. The leaders of Denmark and Greenland are expected to sign the agreement document at next week's UN General Assembly. Prime Minister Frederiksen said in a statement that it "strengthens our common security in the Arctic and North Atlantic region and is excellent for NATO and Europe as well."

A law imposing sanctions tariffs of up to 100% on major countries that purchase crude oil and natural gas from Russia, which continues its invasion of Ukraine, was enacted in the United States on the 18th, and President Trump signed the bill. It imposes tariffs of up to 100% on the top five countries purchasing Russian crude oil and natural gas, with China and India in mind. Sanctions will also be imposed on countries that help Russia evade energy sanctions. For natural gas, a special exception was established to exempt from sanctions countries whose imports of Russian gas remain below 15% of Russia's annual exports and which are taking measures to reduce their purchases.

Lockheed Martin has been upgraded to a Zacks Rank #2 (Buy), a rating that places the stock in the top 20% of the more than 4,000 stocks covered by the Zacks Rank system. The upgrade reflects an upward trend in earnings estimates, with the Zacks Consensus Estimate for the aerospace and defense company rising 1.9% over the past three months. Lockheed is expected to earn $30.45 per share for the fiscal year ending December 2026, which represents no year-over-year change. The Zacks Rank system classifies stocks into five groups, from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and its Zacks Rank #1 stocks have generated an average annual return of +25% since 1988. The upgrade implies that Lockheed's improving earnings outlook could translate into buying pressure and a higher stock price in the near term.

Mercury Systems reported fourth quarter fiscal 2026 revenues of $289.8 million, up 6.1% year on year and 9.2% above analysts' expectations, as the 14 defense contractors stocks tracked by the report collectively beat consensus revenue estimates by 4% and guided next quarter 1.1% above expectations. Chairman and CEO Bill Ballhaus said the company delivered record bookings, record backlog, record revenue, the highest EBITDA margin of the year, and robust free cash flow, though Mercury shares are down 18.5% since reporting and trade at $85.56. Huntington Ingalls posted the group's best quarter, with revenues of $3.42 billion, up 10.9% year on year and 8.2% above expectations, while its shares have traded sideways at $278.53. Parsons delivered the weakest quarter, with revenues of $1.58 billion, flat year on year and 1.9% below expectations, alongside full-year revenue and EBITDA guidance that missed significantly, sending its stock down 25.5% to $46.19. Northrop Grumman reported revenues of $10.88 billion, up 5.1% and 0.5% above expectations, with shares flat at $526.95, and Leidos reported revenues of $4.56 billion, up 7.2% and 2.6% above expectations, with its stock up 10.4% at $131.09. On average, defense contractors shares are down 2.9% since the latest earnings results.

RTX Corporation announced on September 4 that its Pratt & Whitney business is investing $25 million to expand its manufacturing facility in Niepołomice, Poland, a site that produces complex tubular assemblies for both military and commercial engines. The expanded facility will begin operations in 2028 and create over 120 jobs, adding to a site that already delivers precision components for engines including the F135, the Pratt & Whitney GTF, and the PW800. The move complements the $100 million investment announced in April to boost production and enhance capabilities at the company's facility in Rzeszów, Poland, and is backed by the Polish government under the Polish Investment Zone Programme, which provides certain tax exemptions. RTX ended the second quarter with a record backlog of $289 billion, up 22% year-over-year, and Poland is already the company's largest presence outside the United States with more than 9,500 employees. As of the close on September 11, RTX carried a forward P/E ratio of 27.29, above the sector median of 19.59 and that of peers including LMT, GD, and NOC.

US President Donald Trump posted on Truth Social to welcome a major step forward in establishing a US military base in Poland, with support from Polish President Karol Nawrocki. Trump said the location of the US base will be announced soon, praising Nawrocki's courageous leadership and noting that if this comes to pass, it will be a historic step for the great alliance between the United States and Poland.

General Dynamics was upgraded to a Zacks Rank #2 (Buy) after analysts raised their full-year earnings estimates by 2.3% over the past three months, signaling greater confidence in the company's earnings outlook. The shift in analyst sentiment comes as General Dynamics' year-to-date return has outpaced the broader Aerospace group, suggesting its mix of defense and aerospace businesses is being viewed as relatively resilient within the sector. The recent Q2 2026 earnings release, which showed higher revenue and net income year over year, provided the data analysts used to lift their estimates, alongside ongoing share repurchases and a growing dividend. The upgrade reinforces the near-term outlook but does not materially change the key catalyst of backlog conversion or the biggest current risk around operational and supply chain execution, particularly in Marine and complex aerospace programs. General Dynamics' narrative projects $61.9 billion revenue and $5.6 billion earnings by 2029, yielding a $414.17 fair value, a 15% upside to its current price.

Generac shares surged 31% after the company and Amazon executed a long-term supply agreement for backup generators for Amazon's data centers, a deal worth up to $8 billion that includes initial deliveries totaling $2.4 billion in 2027 and 2028 and warrants allowing an Amazon subsidiary to buy Generac shares through 2033. CoreWeave kicked off a fresh round of fundraising that includes a $3 billion convertible bond issue and an at-the-market offering program allowing it to sell as many as 35 million shares from time to time, saying the program will provide financing flexibility and help migrate its credit profile toward investment grade. Lockheed Martin moved on news that the Pentagon and the company struck a framework agreement for a multi-year production contract for the Joint Advanced Tactical Missile, or JATM, which is still in development but close to entering production and would become the most advanced air-to-air missile in the US arsenal, a role long held by RTX's advanced medium range air-to-air missile since 1993; the new missile program is receiving a $2 billion boost in the Trump administration's proposed budget for the fiscal year starting October 1. Boeing faces hard months ahead as CEO Kelly Ortberg and the CFO laid out challenges that surprised investors, including additional testing for the 777X that will spill into next year and a more muted cash outlook.

BWX Technologies is expanding its manufacturing and technology capabilities across advanced nuclear, commercial nuclear and government programs. The company has expanded its Cambridge, Ontario, facility to increase heavy commercial nuclear component manufacturing capacity, and is developing capabilities for high-purity depleted uranium along with investments in uranium processing and advanced manufacturing facilities. Its Innovation Campus in Lynchburg, VA, brings together design, research, engineering, testing and fabrication for advanced nuclear technologies, with R&D spanning advanced reactors, nuclear fuel, additive and autonomous manufacturing, medical radioisotopes and radiopharmaceuticals. BWXT's 2025 revenues increased 18.3% to $3.2 billion. The Zacks Consensus Estimate points to 2026 and 2027 earnings per share growth of 18.45% and 10.73%, respectively, while the stock trades at a forward 12-month price-to-sales of 3.31X versus the industry average of 7.14X.

It was learned on the 17th that MUFG Bank is moving toward finalizing its internal stance in the near future regarding lending to defense-related companies. The direction is to judge the feasibility of lending on a case-by-case basis according to growth potential and other factors, while taking into account whether such lending is consistent with the government's security policy. The defense industry is one of the 17 fields that the government has positioned as a strategic investment target in its growth strategy, and a policy has been set out to support startups and others through public-private investment with the aim of strengthening the technological and production foundations for dual-use goods such as drones.

US President Donald Trump told reporters on the evening of Wednesday, September 16, that he hopes the war with Iran, now dragging into its seventh month, is nearing an end, saying Iran wants a deal and that he had been contacted directly by Iran, though he did not disclose further details. The remarks came amid escalating tensions after the Saudi Arabian air force launched strikes in Yemen and Houthi rebels retaliated by firing missiles and sending drones to attack various Saudi cities, including the Red Sea oil port of Yanbu and the Khamis Mushait air base in the south, according to a statement by Yahya Saree, spokesman for the Houthi military. The war erupted on February 28, when the United States and Israel launched attacks on Iran, before Tehran fired back at Israel and US bases in the Persian Gulf countries. The attack on Saudi Arabia that damaged the East-West oil pipeline has prompted oil traders to warn that if the pipeline is forced to halt shipments for an extended period, as much as 4% of global oil supply could be lost. Saudi authorities have not yet specified when the pipeline will be able to resume operation. The spread of the war into Yemen is also compounding the global energy shortage, after the earlier conflict cut off shipping through the Strait of Hormuz, which once carried one-fifth of the world's crude oil and liquefied natural gas. As a result, Brent crude traded at around 108 dollars a barrel on Wednesday, near its highest level since May, while US retail diesel prices surged to a record high of more than 6.30 dollars a gallon, which is becoming major political pressure on the Republican Party ahead of the midterm elections in November. Axios reported, citing sources, that President Trump is scheduled to meet with leaders of the Gulf Cooperation Council, or GCC, which comprises Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait and Oman, on the sidelines of the United Nations General Assembly in New York next Tuesday, September 22, to discuss the next steps in the war with Iran. The conflict between the Saudi-led alliance and the Houthis, which has been underway since 2015 and had once calmed under a ceasefire agreement, flared up violently again after the Houthis declared a maritime blockade on Saudi Arabia last July.

U.S. President Donald Trump signed a memorandum on the 16th excluding Canadian goods from the federal government's civilian procurement system. The move is a countermeasure against what the U.S. says has blocked American companies from entering Canada's government procurement market, and the confrontation between the two countries is sharpening amid an exchange of high tariffs. Trump directed the director of the Office of Management and Budget and the U.S. Trade Representative to identify the goods covered and to monitor how U.S. products are treated in Canadian government procurement as well. Amid the intensifying trade friction, Canada has been drawing rapidly closer to the European Union, and European Commission President Ursula von der Leyen said on the 16th that she envisions making Canada its first "associate member."

The war with Iran has cost the U.S. Department of Defense a total of $38.1 billion through August 1, and could add another $2 billion to $3 billion per month if the fighting drags on. The Congressional Budget Office, or CBO, estimates that more than half of the cost came from procuring missiles and munitions to replace those expended, while costs from increased flying hours came to $10.4 billion and higher oil prices added another $2.7 billion. The war has also reduced the U.S. stockpile of missile interceptors by as much as two-thirds of the level that existed as of June 2025, largely because the United States helped Israel intercept Iranian attacks, and the CBO says replenishing the stockpile could take at least five years even with expanded production capacity. On the inflation impact, the CBO estimates that the Personal Consumption Expenditures price index, or PCE, the inflation gauge the Fed watches most closely, will rise 0.5 point by the first quarter of 2027, while core PCE is expected to be 0.3 point higher, with gasoline and other fuel prices accounting for roughly 40% of the increase in goods prices caused by the war. The release of the new projections may intensify debate over whether the cost of this war was worthwhile, after Trump initially said the war would last only a few weeks, while Democrats campaign on an anti-war platform ahead of the U.S. midterm elections on November 3.

The Pentagon has expanded the potential value of Boeing's KC-46 Pegasus Combat Capability contract by $13.4 billion, more than tripling the contract's ceiling from $5.7 billion to $19.1 billion and adding Foreign Military Sales work. No funds were obligated at the time of the award, so Boeing's revenue and backlog have not immediately increased; the modified agreement instead expands the framework for future defense sales through April 2035. The addition of Foreign Military Sales work broadens Boeing's potential customer base beyond the US government, with Japan and Israel already included and other partner countries possibly joining later. Investors should treat the $19.1 billion ceiling as a long-term demand opportunity rather than guaranteed revenue, since its economic value depends on how much becomes funded work and how effectively Boeing executes it. Hedge fund positioning remains mixed: 90 funds held the stock at the end of Q2, down from 99 in Q1, with Pentwater Capital Management cutting its stake 13% to 6.2 million shares and Fisher Asset Management raising its position 4% to 6.1 million shares, while short interest rose to 2.02% of public float.

RTX has appointed Jill Albertelli as president of Pratt & Whitney, effective Jan. 1, 2027, succeeding Shane Eddy, who has decided to retire. Albertelli will report to RTX Chairman and Chief Executive Officer Chris Calio. She most recently served as president of Pratt & Whitney's Military Engines, where she secured the company's sole source propulsion position on the F-35 fighter aircraft and improved F135 engine delivery and quality performance. Eddy will remain with the company through March 2027 as a special advisor to support the transition, after leading Pratt & Whitney since 2022 through a multi-year transformation and the production and sustainment ramp for the Geared Turbo Fan and F135 engines. RTX, headquartered in Arlington, Virginia, reported 2025 sales of more than $88 billion and has more than 180,000 global employees.

RTX unit Pratt & Whitney signed a new production licensing agreement with Hermeus covering the F100-PW-229 fighter engine, and separately completed the F135 Engine Core Upgrade Risk Reduction Design Review for the engine that powers the F-35. The Hermeus accord allows Hermeus to manufacture the F100-PW-229, an engine widely used across U.S. military fighter aircraft fleets, giving Pratt & Whitney another qualified source for one of its most widely fielded fighter engines and supporting supply resilience and throughput. RTX, a US-based aerospace and defense group with a market value of about $266.4b, supplies engines, systems, and services to military, commercial, and government customers. The F135 Engine Core Upgrade review and the F100 production license both speak to RTX's push into technology-heavy defense work while managing engine-related risks. The key marker to watch is whether the F135 Engine Core Upgrade shifts from design milestones into funded production and retrofit orders across the existing fleet, with clear timing and volumes.