JPMorgan analysts warn that aerospace and defense companies, including Lockheed Martin (LMT, Financial), Raytheon Technologies (RTX), Northrop Grumman (NOC), and General Dynamics (GD), could face significant federal budget cuts as the U.S. government seeks deficit reduction strategies. Consequently, JPMorgan has lowered the valuation multiples and 2025 price targets for these companies.
The upcoming U.S. election may pose challenges for defense stocks due to potential fiscal constraints imposed by the Office of Management and Budget (OMB) and possible reductions in support for Ukraine. However, some congressional support for increased budgets and global threats offer a more balanced outlook.
Information technology service providers like Booz Allen Hamilton (BAH), CACI International (CACI), and Leidos (LDOS) also face similar challenges, with JPMorgan reducing their P/E ratio expectations.