Shares of Lockheed Martin (LMT) and other defense contractors are rising on news that Taiwan is considering buying a large cache of U.S. weapons to defend itself against China.
According to media reports, Taiwan’s government in Taipei is considering purchasing the Aegis destroyer vessel and the F-35 fighter jets that are, at least partially, manufactured by Lockheed Martin. The same reports say Taiwan is also eyeing Northrop Grumman’s (NOC) E-2D Advanced Hawkeye, an airborne radar system, and acquiring more Patriot missiles made by RTX (RTX), formerly Raytheon Technologies.
The U.S. defense purchases are being considered as Taiwan’s government looks to demonstrate to the incoming administration of U.S. President Donald Trump that it is serious about defending itself against aggression from China. Trump has repeatedly called on America’s allies to spend more on their own defense.
Taiwan’s Shopping List
Media reports state that Taiwanese officials have held informal discussions with Trump’s advisors about a defense package that would show Taiwan’s determination to invest in its own defense. The Aegis ship from Lockheed Martin is apparently at the top of the shopping list.
However, Taiwan could also request as many as 60 F-35 fighter jets, four Advanced Hawkeyes, 10 retired warships, and 400 Patriot missiles in a defense package that would be valued at more than $15 billion. During Trump’s first term, the U.S. government approved 11 defense packages to Taiwan worth $21 billion. Those packages included F-16 fighter jets and Abrams tanks.
The stocks of Lockheed Martin, Northrop Grumman, and RTX are each up nearly 2% on news of Taiwan’s potential defense purchases.
Is LMT Stock a Buy?
Lockheed Martin’s stock has a consensus Moderate Buy rating among 16 Wall Street analysts. That rating is based on nine Buy, seven Hold, and no Sell recommendations issued in the last three months. The average LMT price target of $634.19 implies 1.37% upside from current levels.
