Canada is widely expected to stick with a plan to purchase 88 F-35 fighter jets from Lockheed Martin Corp. (LMT) despite calls for the government in Ottawa to dump the U.S. defense contractor.
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Media reports say Canada’s Defense Department is recommending that the government of Prime Minister Mark Carney proceed with the F-35 fighter jet acquisition following a review of the contract, costs, and process.
Buying 88 F-35 jets has proven controversial in Canada because of the C$27.7 billion (US$20.14 billion) price tag and as the U.S. slaps its northern neighbor with crippling tariffs that are above 30% in some instances. There had been a proposal circulating within the Canadian government to break the F-35 order in two to help manage the costs.
Looking Elsewhere?
Canada’s government is contractually obligated to purchase the first 16 F-35 aircraft from Lockheed Martin and has already committed money to do so. However, Prime Minister Carney has mused publicly about buying different military fighter jets from a European rival of Lockheed Martin, such as Airbus (EPA:AIR). But that no longer appears likely.
The F-35 claims to be the most advanced fighter jet in the world and has unique stealth capabilities, meaning it can evade detection by radar. Canada’s Defense Department has begun to spend an initial $500 million to construct two hangars to house the F-35 fighter jets. LMT stock is down 10% this year.
Is LMT Stock a Buy?
The stock of Lockheed Martin has a consensus Moderate Buy rating among 15 Wall Street analysts. That rating is based on five Buy, nine Hold, and one Sell recommendations issued in the last three months. The average LMT price target of $476.87 implies 10.77% upside from current levels.
