Lockheed Martin (NYSE:LMT) stock closed almost 2% in the red today on insider info that President Joe Biden will order fewer F-35 fighter jets in the upcoming federal budget.
According to people familiar with the matter, Biden is expected to order around 70 F-35s from Lockheed for fiscal 2025, down from 83 expected planes. The recent cut in F-35s is predicted to account for a roughly 2% decline in the company’s sales guidance this year.
This marks a now-repeated trend of slowing F-35 orders from the United States. If you recall, Lockheed delivered almost 100 F-35s in 2023, which was itself a decrease from 141 delivered in 2022, per Barron’s.
The president typically makes budget requests about a year ahead of time. Meanwhile, lawmakers work on a spending bill leading up to the new fiscal year, beginning on Oct. 1.
The decline in F-35 sales shouldn’t come as too much of a revenue shock for the defense giant. Indeed, Lockheed already considered U.S. Department of Defense budgetary restrictions in its 2024 guidance.
Despite lower F-35 sales, Lockheed enjoyed a 2% year-over-year (YOY) increase in aeronautics sales in 2023.
LMT Stock Continues Slide Amid Talks With Poland
With today’s dip, LMT stock is down about 8% so far this year. LMT is also in the red by roughly 13% over the past 12 months.
That said, Lockheed may have some huge business opportunities bubbling under the surface. Indeed, news broke today that Poland President Andrzej Duda met with Lockheed CEO Jim Taiclet to engage in talks about “securing the participation of Poland’s defense sector.” Given the war in Ukraine, Poland has purchased billions “worth of weapons and military equipment from South Korea and from the U.S., including HIMARS systems, Abrams tanks and F-35 fighters.”
Indeed, Poland spent 4% of its gross domestic product (GDP) on defense in 2022. That’s double NATO’s recommended 2%. The country’s 2023 budget allocates about 3.1% of GDP for defense.
Depending on how things develop between Lockheed Martin and Poland, it could mean a solid windfall for the defense company.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
