Lockheed and Other Defense Stocks Are Moving. The Pentagon Wants More Missiles.

Shares of Lockheed, Northrop, RTX, General Dynamics, and L3Harris were up an average of about 27% year to date (Omar Marques/Getty Images)

Key Points

• Defense stocks rose after the Pentagon urged contractors to significantly increase missile production, with some shares up over 1%.
• The Pentagon is exploring “extraordinary avenues” with defense industry leaders to expand military might and accelerate munitions production.
• General Dynamics received an upgrade from Seaport Research to Buy from Hold, with a new price target of $376, a 14% increase.

Defense stocks rose Monday after The Wall Street Journal reported that the Defense Department pressed for missile production to increase dramatically.

Shares of Lockheed Martin , Northrop Grumman , RTX, General Dynamics , and L3Harris Technologies rose 0.6% on average. At daily highs, the group was up an average of 2.2%. The S&P 500 gained 0.3% and the Dow Jones Industrial Average added 0.2%.

The Pentagon urged contractors to double or even quadruple missile production rates, according to the Journal. The Defense Department didn’t respond to a request for comment from Barron’s.

A Pentagon spokesman told the Journal: “President Trump and Secretary Hegseth are exploring extraordinary avenues to expand our military might and accelerate the production of munitions,” adding, “This effort has been a collaboration between defense industry leaders and senior Pentagon officials.”

An increase in production would mean more business for defense contractors who have missiles or supply parts for missiles. Lockheed makes many missiles, including hypersonics, surface-to-air missiles, interceptors, and others. Northrop Grumman makes the Sentinel intercontinental ballistic missile. RTX makes Patriot interceptors. General Dynamics makes rockets as well as supplies subsystems. L3Harris also supplies parts for missile makers.

An upgrade from Seaport Research also helped General Dynamics’ stock. Analyst Richard Safran took his rating to Buy from Hold, establishing a new $376 price target for shares, up about 14% from recent levels.

Coming into Monday trading, shares of the five contractors were up an average of about 27% this year, boosted by rising military spending in the U.S. and Europe. Lockheed, while still positive on the year, is the laggard of the group; investors are worried that demand for its F-35 fighter jet could slow.

Write to Al Root at allen.root@dowjones.com