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F-35 suppliers also slide following derisive Trump tweet

  • Pres.-elect Trump's broadside (I, II) against the Pentagon’s most expensive weapons system isn't just slamming Lockheed Martin (LMT -3.4%); nearly every major defense contractor except Boeing has exposure to the F-35 fighter jet program.
  • Northrop Grumann (NOC -3.8%), a major supplier to the F-35, is suffering comparable losses, and suppliers United Technologies (UTX -0.1%) and BAE Systems (OTCPK:BAESY -1.5%) also are lower.
  • "Trump has clearly learned that bully pulpit of Twitter can be pretty powerful," says Cowen defense stock analyst Cai von Rumoh. "Defense is in essence a political business, so if the president or president-elect says you're asking too much money, people worry."
  • But investors should not panic over F-35’s prospects based on a single Trump tweet, says Byron Callan, a defense analyst at Capital Alpha: “Stating that costs are ‘out of control’ is wrong. Yes, there are affordability issues on the F-35 and there may be alternative ways to deliver capabilities offered by the F-35 through other platforms or weapons. However, unit prices have been declining, and the program has stabilized in recent years.”

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