Source: Zhitong Finance
Wells Fargo reports that unless the US increases military spending, Iran's attack on Israel over the weekend is unlikely to affect US defense stocks.
Wells Fargo analysts released a report on Monday saying that unless the US increases military spending, Iran's weekend attack on Israel is unlikely to affect US defense stocks.
Wells Fargo analyst Matthew Aker said, “Although the risk of a broader conflict in the Middle East has increased, we have not seen a clear path for the US to increase defense spending.” “We are still cautious about this sector and are more optimistic$L3Harris Technologies (LHX.US)$und$RTX Corp (RTX.US)$.”
As part of the budget agreement approved by Congress, US defense spending is currently limited. Over the past two months, a $95 billion supplementary program aimed at supporting America's allies and providing humanitarian aid to civilians in Ukraine and Gaza has been at a standstill.
US House Speaker Mike Johnson said on Sunday that he will try to get the House of Representatives to approve this spending, and Republican lawmakers are divided on this. This additional expenditure is equivalent to about 11% of the US government's 2025 defense budget.
Wells Fargo said: “We have seen that the Supplementary Act is more likely to pass this year.” “After the events of this weekend, we think the probability is over 90%.”
According to reports, 99% of the approximately 300 missiles and drones launched by Iran to Israel were intercepted by air defense systems.
Wells Fargo said: “Most air defense systems use interceptors made with Thor technology, including the American Aegis system and Israel's David slingshot and iron dome.” “According to conservative estimates, hundreds of millions of dollars worth of interceptors have been consumed and need to be replaced.”
Wells Fargo to L3Harris Technologies,$Leidos (LDOS.US)$,$General Dynamics (GD.US)$und$CACI International (CACI.US)$With an “added” rating, these companies provide information technology services to the US federal government and the Department of Defense.