MW 'DOGE' fears shouldn't hurt defense contractors Northrop Grumman and Lockheed, one analyst says

By Steve Gelsi

Elon Musk's Department of Government Efficiency (DOGE) won't impact these big defense contractors during a dangerous time, Truist analysts said

Elon Musk's Department of Government Efficiency (DOGE) won't hurt the short-term prospects of two of the largest defense contractors in the United States during a dangerous geopolitical time, analysts at Truist said.

Truist analyst Michael Ciarmoli initiated coverage of Northrop Grumman Corp. $(NOC)$ and Lockheed Martin Corp $(LMT)$ with buy ratings because recent drops in their stock prices present a buying opportunity.

Ciarmoli set a price target of $544 a share for Northrop Grumman and a $579 price target for Lockheed Martin.

"We believe NOC's recent 18% pullback off its late 2024 high has created a compelling entry point," Ciarmoli said in a research note. "Ultimately we believe DOGE related fears are overblown ... the threat level remains elevated and U.S. Defense/NATO defense spending will continue to rise in the coming periods."

DOGE refers to a new advisory board, set up by President-elect Donald Trump and led by billionaire Elon Musk and former GOP presidential candidate Vivek Ramaswamy, tasked with cutting money from the federal government.

Read more: Why Elon Musk had to drop his 'DOGE' pledge to cut $2 trillion from the federal budget

Ciarmoli said Northrop's nuclear triad B-21 Raider and Sentinel GBSD programs "will provide stability and growth which should be augmented by robust missile/munition demands" with no other challengers to the business posing a material risk.

Meanwhile, Lockheed Martin's F-35 fighter jet program may be targeted for cuts, but not in the short term.

"We believe management's growth framework will prove conservative, with missile related revs pacing growth and free cash flow being revised higher," he said.

Northrop Grumman's stock rose 0.2% on Tuesday morning, while Lockheed Martin's stock fell 0.5%.

Northrop's stock has risen about 1% so far in 2025 while Lockheed Martin is down about 1.1%, while the S&P 500 has fallen 0.4% this year.

-Steve Gelsi

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January 14, 2025 10:43 ET (15:43 GMT)

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