Al Root

The U.S. defense industry had a busy few days around the Easter holiday. It isn't helping the stocks, but the shares aren't plunging, either.

Investors will want clarification when the management teams of many of the companies report their first-quarter earnings later this week.

For starters, reports surfaced late last week that SpaceX, Palantir, and Anduril might be awarded a contract to create President Donald Trump's Golden Dome missile defense shield. That is the kind of headline that should make traditional defense investors nervous.

SpaceX is the dominant provider of both space launch services and satellite communication services. Palantir brings expertise in software and artificial intelligence. Anduril is a defense startup, valued at some $30 billion in private markets, that is a mix of the two: It focuses on making autonomous defense technologies at scale with lower-cost commercial technology.

SpaceX CEO Elon Musk denied the reports on X: "SpaceX has not tried to bid for any contract....If the President asks us to help in this regard, we will do so, but I hope that other companies (not SpaceX) can do this."

Palantir and Anduril didn't immediately respond to requests for comment.

Details are thin, but awarding a project like the Golden Dome without a traditional bidding process would be very unusual, pointed out Vertical Research Partners analyst Rob Stallard.

Later in the weekend, The Wall Street Journal reported that Defense Secretary Pete Hegseth had shared sensitive details about U.S. strikes on Houthi rebels in Yemen via a chat group on the Signal app that included his wife and other people who didn't need real-time information about the operation. According to the Journal, the information was shared at about the same time the editor of the Atlantic magazine was included in a separate Signal chat group that discussed the same information.

Reports of that chat group set off a political firestorm both because the Atlantic's editor was included and because officials discussed operational details of the strikes via Signal, rather than via secure government channels.

The Defense Department didn't immediately respond to a request for comment about the Journal report.

All that was happening while Lockheed announced that CFO Jay Malave was leaving "to pursue other opportunities outside of the Company." It said in a filing that "Mr. Malave's departure is not related to any financial or accounting issue or any disagreement with the Company on any matter relating to the Company's operations, policies or practices."

Evan Scott has succeeded Malave. Lockheed didn't immediately respond to a request for comment.

So far, defense stocks are holding up well despite the flood of news. Shares of Lockheed, Northrop Grumman, General Dynamics, L3Harris Technologies, and RTX were down about 0.7% on average in early Monday trading, while the S&P 500 and Dow Jones Industrial Average had fallen 2.1% and 1.9%, respectively.

Investors might be waiting to hear from the companies before they decide what effect any of this should have on stock prices.

It's a big week for defense. Lockheed, RTX, and Northrop report their earnings on Tuesday. General Dynamics and Boeing do so on Wednesday, and L3Harris speaks with investors on Thursday.

Earlier in April, L3Harris announced an expansion of an Indiana faciltity to support the "Department of Defense's urgent need for on-orbit technology to defend the homeland by building a Golden Dome around the United States."

Overall, Wall Street isn't expecting much. Earnings for the group should be about flat year over year, according to FactSet. Things are expected to pick up later in 2025, with average earnings growth of about 5% compared to 2024.

Management's updates to their financial forecasts should move the stocks later in the week.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 21, 2025 11:59 ET (15:59 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.