LMT - Pentagon said to plan request for jump in spending amid tensions with China

2023-03-08 09:41:02 ET

President Joe Biden’s spending plan will include one of the largest peacetime defense budgets in U.S. history amid escalating tensions with China, Bloomberg News reported, citing officials familiar with the matter.

The president on Thursday will propose a record $170 billion for weapons procurement and $145 billion for research and development.

The Defense Department’s budget for the year beginning October 1 will rise 2.3% from the current fiscal year to $835 billion, one of the officials told Bloomberg. The White House’s Office of Management and Budget declined to comment on the plan.

Growing tensions with China are shaping the Pentagon’s budget request more than spending on the war in Ukraine. The U.S. military has depleted supplies of weaponry to support Ukraine’s efforts to repel the Russian invasion, but the war has been funded through a separate budget.

Lockheed Martin growth

Lockheed Martin ( NYSE: LMT ), the country’s biggest defense contractor, is among the major combat systems that would benefit from the bigger budget. The company makes the F-35 stealth fighter jet, which would receive $13.5 billion for procurement, ongoing development and upgrades, Bloomberg reported.

The Defense Department will ask for 48 F-35s for the Air Force and 35 for Navy and Marines for a total of 83 planes, up from the 61 requested in last year’s budget. Congress added another 19 jets in this year’s spending bill for a total of 80.

The $170 billion plans is $8 billion more than what Congress set aside for the current fiscal year, while the R&D request is about $5 billion more than what lawmakers approved.

Lockheed Martin's ( LMT ) stock rose 8.4% in the 12 months through March 7, contrasting with a 5.2% decline for the Standard & Poor's 500 stock index ( SP500 ).

Seeking Alpha columnist Yuval Rotem has a Strong Buy rating on Lockheed Martin ( LMT ) because of growth in defense spending . Contributor Jonathan Wheeler rates Lockheed Martin as a Hold because of its current valuation .

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