U.S. defense giant Lockheed Martin (LMT) could be the main Stars and Stripes casualty from Europe’s drive to rearm itself following criticism over its spending commitments from President Trump.
The new President’s insistence that European and other members of NATO commit a higher proportion of their GDP to defense spending alongside a rather lukewarm attitude to the nearly century old Transatlantic alliance have made governments around the continent, twitchy. Added to that is Trump’s seeming insistence on securing a ceasefire in Ukraine which appears to favor the aggressor state Russia.
U.S. Arms Have Been in Demand
The desire to rearm is not new with recent figures from the Stockholm International Peace Research Institute showing that NATO countries in Europe such as the UK and France have more than doubled their arms imports between 2020 and 2024. They are increasingly getting these arms from the U.S. which is now supplying 64% of the total, up from 52% over the previous five-year period.
However, European states are, it appears, looking to bolster their own military suppliers such as German arms manufacturer Rheinmetall (RNMBY). It said last month that it expects 2025 sales to rise by 25% to 30% this year.
Also last month the European Commission, the EU’s executive body, proposed boosting military spending and pooling resources on joint defense projects, as, Reuters reported, “Europe girds for decreased U.S. military engagement under President Donald Trump.” Some of the proposed measures, it said, could mean a smaller role for non-EU companies such as the U.S. and the UK.
Europe Fighting for its Own Suppliers
The initiative called ReArm Europe aims to mobilize upwards of €800 billion to boost defense spending over the coming years. It includes a plan to borrow $162 billion for loans to EU governments to spend on defense projects.
U.S. officials are not best pleased with Secretary of State Marco Rubio stating that any exclusion of U.S. companies from European tenders would be seen negatively by Washington. It also comes amid reports that Trump is planning one of his executive orders, potentially this week, that would ease rules governing exports of military equipment.
Lockheed Martin would benefit from a relaxation in the export rules but conversely would be bashed by any European cutbacks. That’s because, according to TipRanks data, international sales account for 26% of its overall revenue. That compares with around 12% for rival Northrop Grumman (NOC).
Is LMT a Good Stock to Buy Now?
On TipRanks, LMT has a Moderate Buy consensus based on 6 Buy and 13 Hold ratings. Its highest price target is $600. LMT stock’s consensus price target is $520.74 implying an 16.07% upside.
